Correlation Between Sprott Physical and VanEck Junior

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

Diversification Opportunities for Sprott Physical and VanEck Junior

0.96

Correlation Coefficient

Sprott Physical  VanEck Junior

Almost no diversification

The 3 months correlation between Sprott and VanEck is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Silver and VanEck Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Junior Gold 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 VanEck Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Junior Gold has no effect on the direction of Sprott Physical i.e., Sprott Physical and VanEck Junior go up and down completely randomly.

Pair Corralation between Sprott Physical and VanEck Junior

Given the investment horizon of 90 days Sprott Physical Silver is expected to generate 0.61 times more return on investment than VanEck Junior. However, Sprott Physical Silver is 1.64 times less risky than VanEck Junior. It trades about -0.23 of its potential returns per unit of risk. VanEck Junior Gold is currently generating about -0.2 per unit of risk. If you would invest  1,065  in Sprott Physical Silver on October 9, 2024 and sell it today you would lose (65.00) from holding Sprott Physical Silver or give up 6.1% of portfolio value over 90 days.

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

Sprott Physical Silver  vs.  VanEck Junior Gold

Sprott Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Sprott Physical is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

VanEck Junior Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Junior Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, VanEck Junior is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Sprott Physical and VanEck Junior

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

The idea behind Sprott Physical Silver and VanEck Junior Gold 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.