Correlation Between Mast Global and Sprott Energy

Can any of the company-specific risk be diversified away by investing in both Mast Global and Sprott Energy 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 Mast Global and Sprott Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mast Global Battery and Sprott Energy Transition, you can compare the effects of market volatilities on Mast Global and Sprott Energy 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 Mast Global with a short position of Sprott Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mast Global and Sprott Energy.

Diversification Opportunities for Mast Global and Sprott Energy

0.26

Correlation Coefficient

Mast Global  Sprott Energy

Modest diversification

The 3 months correlation between Mast and Sprott is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mast Global Battery and Sprott Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Energy Transition and Mast Global 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 Mast Global Battery are associated (or correlated) with Sprott Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Energy Transition has no effect on the direction of Mast Global i.e., Mast Global and Sprott Energy go up and down completely randomly.

Pair Corralation between Mast Global and Sprott Energy

Allowing for the 90-day total investment horizon Mast Global is expected to generate 1.6 times less return on investment than Sprott Energy. But when comparing it to its historical volatility, Mast Global Battery is 1.88 times less risky than Sprott Energy. It trades about 0.05 of its potential returns per unit of risk. Sprott Energy Transition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,523  in Sprott Energy Transition on December 19, 2024 and sell it today you would earn a total of  58.00  from holding Sprott Energy Transition or generate 3.81% return on investment over 90 days.

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

Mast Global Battery  vs.  Sprott Energy Transition

Mast Global Battery

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mast Global Battery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mast Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sprott Energy Transition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Energy Transition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sprott Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mast Global and Sprott Energy

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

The idea behind Mast Global Battery and Sprott Energy Transition 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.