Correlation Between Sprott Physical and Principal

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

Diversification Opportunities for Sprott Physical and Principal

0.0

Correlation Coefficient

Sprott Physical  Principal

Pay attention - limited upside

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

Pair Corralation between Sprott Physical and Principal

If you would invest  992.00  in Sprott Physical Silver on December 21, 2024 and sell it today you would earn a total of  159.00  from holding Sprott Physical Silver or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sprott Physical Silver  vs.  Principal

Sprott Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Sprott Physical showed solid returns over the last few months and may actually be approaching a breakup point.

Principal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Principal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Principal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and Principal

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

The idea behind Sprott Physical Silver and Principal 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.