Correlation Between Formidable Fortress and Sprott Physical

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

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

Diversification Opportunities for Formidable Fortress and Sprott Physical

-0.16

Correlation Coefficient

Formidable Fortress  Sprott Physical

Good diversification

The 3 months correlation between Formidable and Sprott is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Formidable Fortress 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 Formidable Fortress 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 Formidable Fortress 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 Formidable Fortress i.e., Formidable Fortress and Sprott Physical go up and down completely randomly.

Pair Corralation between Formidable Fortress and Sprott Physical

Given the investment horizon of 90 days Formidable Fortress ETF is expected to generate 0.57 times more return on investment than Sprott Physical. However, Formidable Fortress ETF is 1.76 times less risky than Sprott Physical. It trades about -0.21 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about -0.12 per unit of risk. If you would invest  2,994  in Formidable Fortress ETF on September 20, 2024 and sell it today you would lose (96.00) from holding Formidable Fortress ETF or give up 3.21% of portfolio value over 90 days.

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

Formidable Fortress ETF  vs.  Sprott Physical Gold

Formidable Fortress ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable Fortress ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Formidable Fortress is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Formidable Fortress and Sprott Physical

The main advantage of trading using opposite Formidable Fortress and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formidable Fortress 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 Formidable Fortress 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.