Correlation Between Sprott Gold and Locorr Hedged

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

Diversification Opportunities for Sprott Gold and Locorr Hedged

0.49

Correlation Coefficient

Sprott Gold  Locorr Hedged

Very weak diversification

The 3 months correlation between Sprott and Locorr is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Locorr Hedged Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Hedged Core 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 Locorr Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Hedged Core has no effect on the direction of Sprott Gold i.e., Sprott Gold and Locorr Hedged go up and down completely randomly.

Pair Corralation between Sprott Gold and Locorr Hedged

Assuming the 90 days horizon Sprott Gold Equity is expected to generate 5.34 times more return on investment than Locorr Hedged. However, Sprott Gold is 5.34 times more volatile than Locorr Hedged Core. It trades about 0.01 of its potential returns per unit of risk. Locorr Hedged Core is currently generating about -0.01 per unit of risk. If you would invest  5,438  in Sprott Gold Equity on October 11, 2024 and sell it today you would earn a total of  4.00  from holding Sprott Gold Equity or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

Sprott Gold Equity  vs.  Locorr Hedged Core

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 fairly strong essential indicators, Sprott Gold is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Locorr Hedged Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Locorr Hedged Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Locorr Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sprott Gold and Locorr Hedged

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

The idea behind Sprott Gold Equity and Locorr Hedged Core 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.