Correlation Between IShares MSCI and Sprott Junior

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

By analyzing existing cross correlation between iShares MSCI Global and Sprott Junior Gold, you can compare the effects of market volatilities on IShares MSCI and Sprott 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 IShares MSCI with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Sprott Junior.

Diversification Opportunities for IShares MSCI and Sprott Junior

0.95

Correlation Coefficient

IShares MSCI  Sprott Junior

Almost no diversification

The 3 months correlation between IShares and Sprott is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global and Sprott Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Gold and IShares MSCI 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 iShares MSCI Global are associated (or correlated) with Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Gold has no effect on the direction of IShares MSCI i.e., IShares MSCI and Sprott Junior go up and down completely randomly.

Pair Corralation between IShares MSCI and Sprott Junior

Given the investment horizon of 90 days iShares MSCI Global is expected to generate 0.91 times more return on investment than Sprott Junior. However, iShares MSCI Global is 1.1 times less risky than Sprott Junior. It trades about 0.26 of its potential returns per unit of risk. Sprott Junior Gold is currently generating about 0.17 per unit of risk. If you would invest  2,860  in iShares MSCI Global on December 26, 2024 and sell it today you would earn a total of  896.00  from holding iShares MSCI Global or generate 31.33% return on investment over 90 days.

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

iShares MSCI Global  vs.  Sprott Junior Gold

iShares MSCI Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, IShares MSCI reported solid returns over the last few months and may actually be approaching a breakup point.

Sprott Junior Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Junior Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Sprott Junior revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and Sprott Junior

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

The idea behind iShares MSCI Global and Sprott 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.