Correlation Between FT Cboe and Sprott

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

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

Diversification Opportunities for FT Cboe and Sprott

0.9

Correlation Coefficient

FT Cboe  Sprott

Almost no diversification

The 3 months correlation between IGLD and Sprott is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of FT Cboe i.e., FT Cboe and Sprott go up and down completely randomly.

Pair Corralation between FT Cboe and Sprott

Given the investment horizon of 90 days FT Cboe Vest is expected to under-perform the Sprott. But the etf apears to be less risky and, when comparing its historical volatility, FT Cboe Vest is 1.59 times less risky than Sprott. The etf trades about -0.11 of its potential returns per unit of risk. The Sprott Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,317  in Sprott Inc on September 5, 2024 and sell it today you would earn a total of  59.00  from holding Sprott Inc or generate 1.37% return on investment over 90 days.

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

FT Cboe Vest  vs.  Sprott Inc

FT Cboe Vest

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, FT Cboe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sprott Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal forward indicators, Sprott demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FT Cboe and Sprott

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

The idea behind FT Cboe Vest and Sprott 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 Transaction History module to view history of all your transactions and understand their impact on performance.