Correlation Between Sprott Physical and Barclays Capital

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

Diversification Opportunities for Sprott Physical and Barclays Capital

0.0

Correlation Coefficient

Sprott Physical  Barclays Capital

Pay attention - limited upside

The 3 months correlation between Sprott and Barclays is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Sprott Physical i.e., Sprott Physical and Barclays Capital go up and down completely randomly.

Pair Corralation between Sprott Physical and Barclays Capital

Given the investment horizon of 90 days Sprott Physical is expected to generate 521.6 times less return on investment than Barclays Capital. But when comparing it to its historical volatility, Sprott Physical Gold is 229.04 times less risky than Barclays Capital. It trades about 0.08 of its potential returns per unit of risk. Barclays Capital is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Barclays Capital on October 3, 2024 and sell it today you would earn a total of  7,254  from holding Barclays Capital or generate 6716.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	24.47%
Values	Daily Returns

Sprott Physical Gold  vs.  Barclays Capital

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.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sprott Physical and Barclays Capital

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

The idea behind Sprott Physical Gold and Barclays Capital 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.