Correlation Between Sprott Gold and Westcore Municipal

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

Diversification Opportunities for Sprott Gold and Westcore Municipal

-0.23

Correlation Coefficient

Sprott Gold  Westcore Municipal

Very good diversification

The 3 months correlation between Sprott and Westcore is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Westcore Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Municipal 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 Westcore Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Municipal has no effect on the direction of Sprott Gold i.e., Sprott Gold and Westcore Municipal go up and down completely randomly.

Pair Corralation between Sprott Gold and Westcore Municipal

Assuming the 90 days horizon Sprott Gold Equity is expected to under-perform the Westcore Municipal. In addition to that, Sprott Gold is 8.1 times more volatile than Westcore Municipal Opportunities. It trades about -0.1 of its total potential returns per unit of risk. Westcore Municipal Opportunities is currently generating about 0.14 per unit of volatility. If you would invest  966.00  in Westcore Municipal Opportunities on September 4, 2024 and sell it today you would earn a total of  7.00  from holding Westcore Municipal Opportunities or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Sprott Gold Equity  vs.  Westcore Municipal Opportuniti

Sprott Gold Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Equity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish essential indicators, Sprott Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Westcore Municipal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westcore Municipal Opportunities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Westcore Municipal 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 Westcore Municipal

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

The idea behind Sprott Gold Equity and Westcore Municipal Opportunities 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 Commodity Directory module to find actively traded commodities issued by global exchanges.