Correlation Between Sprott Gold and Dreyfus International

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

Diversification Opportunities for Sprott Gold and Dreyfus International

0.69

Correlation Coefficient

Sprott Gold  Dreyfus International

Poor diversification

The 3 months correlation between Sprott and Dreyfus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Dreyfus International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus International 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 Dreyfus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus International has no effect on the direction of Sprott Gold i.e., Sprott Gold and Dreyfus International go up and down completely randomly.

Pair Corralation between Sprott Gold and Dreyfus International

Assuming the 90 days horizon Sprott Gold Equity is expected to generate 1.87 times more return on investment than Dreyfus International. However, Sprott Gold is 1.87 times more volatile than Dreyfus International Stock. It trades about 0.25 of its potential returns per unit of risk. Dreyfus International Stock is currently generating about 0.16 per unit of risk. If you would invest  5,103  in Sprott Gold Equity on December 30, 2024 and sell it today you would earn a total of  1,401  from holding Sprott Gold Equity or generate 27.45% return on investment over 90 days.

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

Sprott Gold Equity  vs.  Dreyfus International Stock

Sprott Gold Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Equity are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish essential indicators, Sprott Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Dreyfus International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus International Stock are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dreyfus International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sprott Gold and Dreyfus International

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

The idea behind Sprott Gold Equity and Dreyfus International Stock 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.