Correlation Between VanEck Junior and Sprott Junior

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

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

Diversification Opportunities for VanEck Junior and Sprott Junior

0.89

Correlation Coefficient

VanEck Junior  Sprott Junior

Very poor diversification

The 3 months correlation between VanEck and Sprott is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Junior Gold and Sprott Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Gold and VanEck Junior 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 VanEck Junior Gold are associated (or correlated) with Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Gold has no effect on the direction of VanEck Junior i.e., VanEck Junior and Sprott Junior go up and down completely randomly.

Pair Corralation between VanEck Junior and Sprott Junior

Given the investment horizon of 90 days VanEck Junior is expected to generate 2.56 times less return on investment than Sprott Junior. In addition to that, VanEck Junior is 1.1 times more volatile than Sprott Junior Gold. It trades about 0.04 of its total potential returns per unit of risk. Sprott Junior Gold is currently generating about 0.11 per unit of volatility. If you would invest  3,673  in Sprott Junior Gold on September 13, 2024 and sell it today you would earn a total of  465.00  from holding Sprott Junior Gold or generate 12.66% return on investment over 90 days.

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

VanEck Junior Gold  vs.  Sprott Junior Gold

VanEck Junior Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Junior Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, VanEck Junior is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Sprott Junior Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Junior Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Sprott Junior revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Junior and Sprott Junior

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

The idea behind VanEck Junior Gold and Sprott Junior Gold 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.