Correlation Between Sprott Physical and Canada Goose

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

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

Diversification Opportunities for Sprott Physical and Canada Goose

-0.3

Correlation Coefficient

Sprott Physical  Canada Goose

Very good diversification

The 3 months correlation between Sprott and Canada is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings and Sprott Physical 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 Physical Gold are associated (or correlated) with Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Sprott Physical i.e., Sprott Physical and Canada Goose go up and down completely randomly.

Pair Corralation between Sprott Physical and Canada Goose

Assuming the 90 days trading horizon Sprott Physical is expected to generate 2.37 times less return on investment than Canada Goose. But when comparing it to its historical volatility, Sprott Physical Gold is 1.58 times less risky than Canada Goose. It trades about 0.16 of its potential returns per unit of risk. Canada Goose Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Canada Goose Holdings on September 19, 2024 and sell it today you would earn a total of  120.00  from holding Canada Goose Holdings or generate 9.06% return on investment over 90 days.

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

Sprott Physical Gold  vs.  Canada Goose Holdings

Sprott Physical Gold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Canada Goose is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and Canada Goose

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

The idea behind Sprott Physical Gold and Canada Goose Holdings 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .