Correlation Between Sprott Focus and SP 500
Can any of the company-specific risk be diversified away by investing in both Sprott Focus and SP 500 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 SP 500 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 SP 500 MINI, you can compare the effects of market volatilities on Sprott Focus and SP 500 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 SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Focus and SP 500.
Diversification Opportunities for Sprott Focus and SP 500
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and XSP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and SP 500 MINI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 MINI 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 SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 MINI has no effect on the direction of Sprott Focus i.e., Sprott Focus and SP 500 go up and down completely randomly.
Pair Corralation between Sprott Focus and SP 500
Given the investment horizon of 90 days Sprott Focus is expected to generate 1.88 times less return on investment than SP 500. In addition to that, Sprott Focus is 1.17 times more volatile than SP 500 MINI. It trades about 0.05 of its total potential returns per unit of risk. SP 500 MINI is currently generating about 0.11 per unit of volatility. If you would invest 44,116 in SP 500 MINI on December 7, 2024 and sell it today you would earn a total of 13,586 from holding SP 500 MINI or generate 30.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sprott Focus Trust vs. SP 500 MINI
Performance |
Timeline |
Sprott Focus and SP 500 Volatility Contrast
Predicted Return Density |
Returns |
Sprott Focus Trust
Pair trading matchups for Sprott Focus
SP 500 MINI
Pair trading matchups for SP 500
Pair Trading with Sprott Focus and SP 500
The main advantage of trading using opposite Sprott Focus and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Focus position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select | Sprott Focus vs. Federated Premier Municipal |
SP 500 vs. POSCO Holdings | SP 500 vs. Ironveld Plc | SP 500 vs. Titan Machinery | SP 500 vs. Titan International |
Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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