Correlation Between Sprott Gold and Virtus Kar

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

Diversification Opportunities for Sprott Gold and Virtus Kar

0.35

Correlation Coefficient

Sprott Gold  Virtus Kar

Weak diversification

The 3 months correlation between Sprott and Virtus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Sprott Gold i.e., Sprott Gold and Virtus Kar go up and down completely randomly.

Pair Corralation between Sprott Gold and Virtus Kar

Assuming the 90 days horizon Sprott Gold Equity is expected to generate 1.26 times more return on investment than Virtus Kar. However, Sprott Gold is 1.26 times more volatile than Virtus Kar Small Cap. It trades about 0.04 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.0 per unit of risk. If you would invest  4,282  in Sprott Gold Equity on October 26, 2024 and sell it today you would earn a total of  1,293  from holding Sprott Gold Equity or generate 30.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Sprott Gold Equity  vs.  Virtus Kar 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 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.

Virtus Kar Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Sprott Gold and Virtus Kar

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

The idea behind Sprott Gold Equity and Virtus Kar 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 Global Correlations module to find global opportunities by holding instruments from different markets.