Correlation Between Sprott Focus and Rumble

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

Diversification Opportunities for Sprott Focus and Rumble

0.81

Correlation Coefficient

Sprott Focus  Rumble

Very poor diversification

The 3 months correlation between Sprott and Rumble is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble Inc 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of Sprott Focus i.e., Sprott Focus and Rumble go up and down completely randomly.

Pair Corralation between Sprott Focus and Rumble

Given the investment horizon of 90 days Sprott Focus is expected to generate 9.54 times less return on investment than Rumble. But when comparing it to its historical volatility, Sprott Focus Trust is 9.76 times less risky than Rumble. It trades about 0.16 of its potential returns per unit of risk. Rumble Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  683.00  in Rumble Inc on September 13, 2024 and sell it today you would earn a total of  131.00  from holding Rumble Inc or generate 19.18% return on investment over 90 days.

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

Sprott Focus Trust  vs.  Rumble Inc

Sprott Focus Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 14 (%) 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.

Rumble Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rumble Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rumble displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Focus and Rumble

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

The idea behind Sprott Focus Trust and Rumble Inc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.