Correlation Between Sprott Physical and Teucrium Corn

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Teucrium Corn 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 Teucrium Corn 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 Teucrium Corn, you can compare the effects of market volatilities on Sprott Physical and Teucrium Corn 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 Teucrium Corn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Teucrium Corn.

Diversification Opportunities for Sprott Physical and Teucrium Corn

-0.23

Correlation Coefficient

Sprott Physical  Teucrium Corn

Very good diversification

The 3 months correlation between Sprott and Teucrium is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Teucrium Corn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Corn 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 Teucrium Corn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Corn has no effect on the direction of Sprott Physical i.e., Sprott Physical and Teucrium Corn go up and down completely randomly.

Pair Corralation between Sprott Physical and Teucrium Corn

Given the investment horizon of 90 days Sprott Physical Gold is expected to generate 0.76 times more return on investment than Teucrium Corn. However, Sprott Physical Gold is 1.32 times less risky than Teucrium Corn. It trades about 0.08 of its potential returns per unit of risk. Teucrium Corn is currently generating about -0.05 per unit of risk. If you would invest  1,425  in Sprott Physical Gold on September 26, 2024 and sell it today you would earn a total of  588.00  from holding Sprott Physical Gold or generate 41.26% 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.  Teucrium Corn

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Teucrium Corn

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teucrium Corn are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Teucrium Corn is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and Teucrium Corn

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

The idea behind Sprott Physical Gold and Teucrium Corn 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.