Correlation Between Sprott Physical and Anfield Resources

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Anfield Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sprott Physical and Anfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sprott Physical Gold and Anfield Resources, you can compare the effects of market volatilities on Sprott Physical and Anfield Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sprott Physical with a short position of Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Anfield Resources.

Diversification Opportunities for Sprott Physical and Anfield Resources

0.69

Correlation Coefficient

Sprott Physical  Anfield Resources

Poor diversification

The 3 months correlation between Sprott and Anfield is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Sprott Physical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sprott Physical Gold are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Sprott Physical i.e., Sprott Physical and Anfield Resources go up and down completely randomly.

Pair Corralation between Sprott Physical and Anfield Resources

Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 0.21 times more return on investment than Anfield Resources. However, Sprott Physical Gold is 4.7 times less risky than Anfield Resources. It trades about 0.12 of its potential returns per unit of risk. Anfield Resources is currently generating about -0.14 per unit of risk. If you would invest  3,371  in Sprott Physical Gold on September 15, 2024 and sell it today you would earn a total of  102.00  from holding Sprott Physical Gold or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sprott Physical Gold  vs.  Anfield Resources

Sprott Physical Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anfield Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anfield Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Anfield Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Anfield Resources

The main advantage of trading using opposite Sprott Physical and Anfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Anfield Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anfield Resources will offset losses from the drop in Anfield Resources' long position.

The idea behind Sprott Physical Gold and Anfield Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.