Correlation Between Sprott Focus and Ipsos SA

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

By analyzing existing cross correlation between Sprott Focus Trust and Ipsos SA, you can compare the effects of market volatilities on Sprott Focus and Ipsos SA 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 Focus with a short position of Ipsos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Focus and Ipsos SA.

Diversification Opportunities for Sprott Focus and Ipsos SA

-0.62

Correlation Coefficient

Sprott Focus  Ipsos SA

Excellent diversification

The 3 months correlation between Sprott and Ipsos is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Ipsos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsos SA and Sprott Focus 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 Focus Trust are associated (or correlated) with Ipsos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsos SA has no effect on the direction of Sprott Focus i.e., Sprott Focus and Ipsos SA go up and down completely randomly.

Pair Corralation between Sprott Focus and Ipsos SA

Given the investment horizon of 90 days Sprott Focus Trust is expected to generate 0.92 times more return on investment than Ipsos SA. However, Sprott Focus Trust is 1.09 times less risky than Ipsos SA. It trades about 0.04 of its potential returns per unit of risk. Ipsos SA is currently generating about 0.04 per unit of risk. If you would invest  750.00  in Sprott Focus Trust on September 12, 2024 and sell it today you would earn a total of  62.00  from holding Sprott Focus Trust or generate 8.27% return on investment over 90 days.

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

Sprott Focus Trust  vs.  Ipsos SA

Sprott Focus Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Sprott Focus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ipsos SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sprott Focus and Ipsos SA

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

The idea behind Sprott Focus Trust and Ipsos SA 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.