Correlation Between Sprott Gold and Nuveen Small

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

Diversification Opportunities for Sprott Gold and Nuveen Small

-0.41

Correlation Coefficient

Sprott Gold  Nuveen Small

Very good diversification

The 3 months correlation between Sprott and Nuveen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap 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 Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Sprott Gold i.e., Sprott Gold and Nuveen Small go up and down completely randomly.

Pair Corralation between Sprott Gold and Nuveen Small

Assuming the 90 days horizon Sprott Gold Equity is expected to under-perform the Nuveen Small. In addition to that, Sprott Gold is 1.26 times more volatile than Nuveen Small Cap. It trades about -0.07 of its total potential returns per unit of risk. Nuveen Small Cap is currently generating about 0.13 per unit of volatility. If you would invest  2,571  in Nuveen Small Cap on October 25, 2024 and sell it today you would earn a total of  278.00  from holding Nuveen Small Cap or generate 10.81% return on investment over 90 days.

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

Sprott Gold Equity  vs.  Nuveen Small Cap

Sprott Gold Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Gold Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest sluggish performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Nuveen Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nuveen Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sprott Gold and Nuveen Small

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

The idea behind Sprott Gold Equity and Nuveen Small Cap 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.