Correlation Between Sprott Gold and Baron Health
Can any of the company-specific risk be diversified away by investing in both Sprott Gold and Baron Health 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 Gold and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Gold Equity and Baron Health Care, you can compare the effects of market volatilities on Sprott Gold and Baron Health 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 Gold with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and Baron Health.
Diversification Opportunities for Sprott Gold and Baron Health
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprott and Baron is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Sprott Gold 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 Gold Equity are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Sprott Gold i.e., Sprott Gold and Baron Health go up and down completely randomly.
Pair Corralation between Sprott Gold and Baron Health
Assuming the 90 days horizon Sprott Gold Equity is expected to under-perform the Baron Health. In addition to that, Sprott Gold is 2.0 times more volatile than Baron Health Care. It trades about -0.22 of its total potential returns per unit of risk. Baron Health Care is currently generating about -0.26 per unit of volatility. If you would invest 2,033 in Baron Health Care on September 23, 2024 and sell it today you would lose (97.00) from holding Baron Health Care or give up 4.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sprott Gold Equity vs. Baron Health Care
Performance |
Timeline |
Sprott Gold Equity |
Baron Health Care |
Sprott Gold and Baron Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sprott Gold and Baron Health
The main advantage of trading using opposite Sprott Gold and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold position performs unexpectedly, Baron Health 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 Baron Health will offset losses from the drop in Baron Health's long position.Sprott Gold vs. Sprott Junior Gold | Sprott Gold vs. Sprott Gold Miners | Sprott Gold vs. Europac Gold Fund | Sprott Gold vs. US Global GO |
Baron Health vs. Sprott Gold Equity | Baron Health vs. Gabelli Gold Fund | Baron Health vs. James Balanced Golden | Baron Health vs. International Investors Gold |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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