Correlation Between Main International and Sprott Physical

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

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

Diversification Opportunities for Main International and Sprott Physical

0.25

Correlation Coefficient

Main International  Sprott Physical

Modest diversification

The 3 months correlation between Main and Sprott is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Main International ETF and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold and Main International 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 Main International ETF are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Main International i.e., Main International and Sprott Physical go up and down completely randomly.

Pair Corralation between Main International and Sprott Physical

Given the investment horizon of 90 days Main International is expected to generate 6.03 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, Main International ETF is 1.54 times less risky than Sprott Physical. It trades about 0.01 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,154  in Sprott Physical Gold on September 20, 2024 and sell it today you would earn a total of  219.00  from holding Sprott Physical Gold or generate 10.17% return on investment over 90 days.

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

Main International ETF  vs.  Sprott Physical Gold

Main International ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Main International ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Main International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Main International and Sprott Physical

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

The idea behind Main International ETF and Sprott Physical 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.