Correlation Between Sprott Physical and WildBrain

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

Diversification Opportunities for Sprott Physical and WildBrain

-0.43

Correlation Coefficient

Sprott Physical  WildBrain

Very good diversification

The 3 months correlation between Sprott and WildBrain is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and WildBrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WildBrain 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 WildBrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WildBrain has no effect on the direction of Sprott Physical i.e., Sprott Physical and WildBrain go up and down completely randomly.

Pair Corralation between Sprott Physical and WildBrain

Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 0.31 times more return on investment than WildBrain. However, Sprott Physical Gold is 3.18 times less risky than WildBrain. It trades about 0.1 of its potential returns per unit of risk. WildBrain is currently generating about 0.02 per unit of risk. If you would invest  3,274  in Sprott Physical Gold on September 13, 2024 and sell it today you would earn a total of  251.00  from holding Sprott Physical Gold or generate 7.67% return on investment over 90 days.

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

Sprott Physical Gold  vs.  WildBrain

Sprott Physical Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 8 (%) 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.

WildBrain

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WildBrain are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, WildBrain is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and WildBrain

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

The idea behind Sprott Physical Gold and WildBrain 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.