Correlation Between Sprott Gold and Abrdn ETFs

Can any of the company-specific risk be diversified away by investing in both Sprott Gold and Abrdn ETFs 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 Abrdn ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sprott Gold Miners and abrdn ETFs , you can compare the effects of market volatilities on Sprott Gold and Abrdn ETFs 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 Abrdn ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and Abrdn ETFs.

Diversification Opportunities for Sprott Gold and Abrdn ETFs

0.85

Correlation Coefficient

Sprott Gold  Abrdn ETFs

Very poor diversification

The 3 months correlation between Sprott and Abrdn is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Miners and abrdn ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn ETFs 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 Miners are associated (or correlated) with Abrdn ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn ETFs has no effect on the direction of Sprott Gold i.e., Sprott Gold and Abrdn ETFs go up and down completely randomly.

Pair Corralation between Sprott Gold and Abrdn ETFs

Given the investment horizon of 90 days Sprott Gold Miners is expected to under-perform the Abrdn ETFs. In addition to that, Sprott Gold is 1.87 times more volatile than abrdn ETFs . It trades about -0.05 of its total potential returns per unit of risk. abrdn ETFs is currently generating about -0.04 per unit of volatility. If you would invest  2,119  in abrdn ETFs on October 25, 2024 and sell it today you would lose (55.00) from holding abrdn ETFs or give up 2.6% of portfolio value over 90 days.

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

Sprott Gold Miners  vs.  abrdn ETFs

Sprott Gold Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Sprott Gold is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

abrdn ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days abrdn ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Abrdn ETFs is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sprott Gold and Abrdn ETFs

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

The idea behind Sprott Gold Miners and abrdn ETFs 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.