Correlation Between Sprott Physical and Global X

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

Diversification Opportunities for Sprott Physical and Global X

-0.14

Correlation Coefficient

Sprott Physical  Global X

Good diversification

The 3 months correlation between Sprott and Global is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Sprott Physical i.e., Sprott Physical and Global X go up and down completely randomly.

Pair Corralation between Sprott Physical and Global X

Considering the 90-day investment horizon Sprott Physical is expected to generate 2.12 times less return on investment than Global X. In addition to that, Sprott Physical is 1.22 times more volatile than Global X Funds. It trades about 0.05 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.14 per unit of volatility. If you would invest  2,463  in Global X Funds on September 24, 2024 and sell it today you would earn a total of  1,325  from holding Global X Funds or generate 53.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.19%
Values	Daily Returns

Sprott Physical Gold  vs.  Global X Funds

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Global X Funds

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sprott Physical and Global X

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

The idea behind Sprott Physical Gold and Global X Funds 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.