Correlation Between Sprott Junior and Amplify ETF

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

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

Diversification Opportunities for Sprott Junior and Amplify ETF

0.84

Correlation Coefficient

Sprott Junior  Amplify ETF

Very poor diversification

The 3 months correlation between Sprott and Amplify is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Junior Gold and Amplify ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify ETF Trust and Sprott Junior 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 Junior Gold are associated (or correlated) with Amplify ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify ETF Trust has no effect on the direction of Sprott Junior i.e., Sprott Junior and Amplify ETF go up and down completely randomly.

Pair Corralation between Sprott Junior and Amplify ETF

Given the investment horizon of 90 days Sprott Junior Gold is expected to generate 0.87 times more return on investment than Amplify ETF. However, Sprott Junior Gold is 1.15 times less risky than Amplify ETF. It trades about 0.07 of its potential returns per unit of risk. Amplify ETF Trust is currently generating about 0.0 per unit of risk. If you would invest  3,558  in Sprott Junior Gold on November 28, 2024 and sell it today you would earn a total of  253.00  from holding Sprott Junior Gold or generate 7.11% return on investment over 90 days.

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

Sprott Junior Gold  vs.  Amplify ETF Trust

Sprott Junior Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Junior Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Sprott Junior may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Amplify ETF Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sprott Junior and Amplify ETF

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

The idea behind Sprott Junior Gold and Amplify ETF Trust 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.