Correlation Between Sprott Physical and IFabric Corp

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

By analyzing existing cross correlation between Sprott Physical Silver and iFabric Corp, you can compare the effects of market volatilities on Sprott Physical and IFabric Corp 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 IFabric Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and IFabric Corp.

Diversification Opportunities for Sprott Physical and IFabric Corp

0.3

Correlation Coefficient

Sprott Physical  IFabric Corp

Weak diversification

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

Pair Corralation between Sprott Physical and IFabric Corp

Assuming the 90 days trading horizon Sprott Physical is expected to generate 7.2 times less return on investment than IFabric Corp. But when comparing it to its historical volatility, Sprott Physical Silver is 4.02 times less risky than IFabric Corp. It trades about 0.03 of its potential returns per unit of risk. iFabric Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  105.00  in iFabric Corp on December 4, 2024 and sell it today you would earn a total of  3.00  from holding iFabric Corp or generate 2.86% return on investment over 90 days.

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

Sprott Physical Silver  vs.  iFabric Corp

Sprott Physical Silver

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iFabric Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iFabric Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IFabric Corp 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 IFabric Corp

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

The idea behind Sprott Physical Silver and iFabric Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.