Correlation Between US Global and Sprott Junior

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

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

Diversification Opportunities for US Global and Sprott Junior

0.98

Correlation Coefficient

US Global  Sprott Junior

Almost no diversification

The 3 months correlation between GOAU and Sprott is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding US Global GO 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 US 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 US Global GO 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 US Global i.e., US Global and Sprott Junior go up and down completely randomly.

Pair Corralation between US Global and Sprott Junior

Given the investment horizon of 90 days US Global GO is expected to generate 0.86 times more return on investment than Sprott Junior. However, US Global GO is 1.17 times less risky than Sprott Junior. It trades about 0.27 of its potential returns per unit of risk. Sprott Junior Gold is currently generating about 0.22 per unit of risk. If you would invest  1,882  in US Global GO on December 28, 2024 and sell it today you would earn a total of  601.00  from holding US Global GO or generate 31.93% return on investment over 90 days.

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

US Global GO  vs.  Sprott Junior Gold

US Global GO

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Global GO are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, US Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sprott Junior Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Junior Gold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Sprott Junior revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Global and Sprott Junior

The main advantage of trading using opposite US Global and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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 US Global GO 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.