Correlation Between Sprott Physical and Overactive Media

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Overactive Media 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 Overactive Media 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 Overactive Media Corp, you can compare the effects of market volatilities on Sprott Physical and Overactive Media 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 Overactive Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Overactive Media.

Diversification Opportunities for Sprott Physical and Overactive Media

0.38

Correlation Coefficient

Sprott Physical  Overactive Media

Weak diversification

The 3 months correlation between Sprott and Overactive is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Overactive Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overactive Media Corp 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 Overactive Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overactive Media Corp has no effect on the direction of Sprott Physical i.e., Sprott Physical and Overactive Media go up and down completely randomly.

Pair Corralation between Sprott Physical and Overactive Media

Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 0.15 times more return on investment than Overactive Media. However, Sprott Physical Gold is 6.55 times less risky than Overactive Media. It trades about 0.16 of its potential returns per unit of risk. Overactive Media Corp is currently generating about 0.02 per unit of risk. If you would invest  3,455  in Sprott Physical Gold on December 3, 2024 and sell it today you would earn a total of  368.00  from holding Sprott Physical Gold or generate 10.65% return on investment over 90 days.

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

Sprott Physical Gold  vs.  Overactive Media Corp

Sprott Physical Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 12 (%) 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 April 2025.

Overactive Media Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Overactive Media Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Overactive Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sprott Physical and Overactive Media

The main advantage of trading using opposite Sprott Physical and Overactive Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Overactive Media 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 Overactive Media will offset losses from the drop in Overactive Media's long position.

The idea behind Sprott Physical Gold and Overactive Media Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.