Correlation Between Sprott Nickel and Sprott Junior

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

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

Diversification Opportunities for Sprott Nickel and Sprott Junior

0.24

Correlation Coefficient

Sprott Nickel  Sprott Junior

Modest diversification

The 3 months correlation between Sprott and Sprott is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and Sprott Junior Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Uranium and Sprott Nickel 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 Sprott Nickel Miners 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 Uranium has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and Sprott Junior go up and down completely randomly.

Pair Corralation between Sprott Nickel and Sprott Junior

Given the investment horizon of 90 days Sprott Nickel Miners is expected to under-perform the Sprott Junior. But the etf apears to be less risky and, when comparing its historical volatility, Sprott Nickel Miners is 1.89 times less risky than Sprott Junior. The etf trades about -0.05 of its potential returns per unit of risk. The Sprott Junior Uranium is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,836  in Sprott Junior Uranium on September 16, 2024 and sell it today you would earn a total of  218.00  from holding Sprott Junior Uranium or generate 11.87% return on investment over 90 days.

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

Sprott Nickel Miners  vs.  Sprott Junior Uranium

Sprott Nickel Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Nickel Miners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sprott Nickel is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Sprott Junior Uranium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Junior Uranium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Sprott Junior revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Nickel and Sprott Junior

The main advantage of trading using opposite Sprott Nickel and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Nickel 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 Sprott Nickel Miners and Sprott Junior Uranium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.