Correlation Between Sprott and General American
Can any of the company-specific risk be diversified away by investing in both Sprott and General American 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 and General American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Inc and General American Investors, you can compare the effects of market volatilities on Sprott and General American 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 with a short position of General American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott and General American.
Diversification Opportunities for Sprott and General American
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sprott and General is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Inc and General American Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General American Inv and Sprott 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 Inc are associated (or correlated) with General American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General American Inv has no effect on the direction of Sprott i.e., Sprott and General American go up and down completely randomly.
Pair Corralation between Sprott and General American
Considering the 90-day investment horizon Sprott Inc is expected to under-perform the General American. In addition to that, Sprott is 2.94 times more volatile than General American Investors. It trades about -0.03 of its total potential returns per unit of risk. General American Investors is currently generating about 0.05 per unit of volatility. If you would invest 5,040 in General American Investors on December 2, 2024 and sell it today you would earn a total of 49.00 from holding General American Investors or generate 0.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sprott Inc vs. General American Investors
Performance |
Timeline |
Sprott Inc |
General American Inv |
Sprott and General American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sprott and General American
The main advantage of trading using opposite Sprott and General American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott position performs unexpectedly, General American 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 General American will offset losses from the drop in General American's long position.Sprott vs. Invesco Quality Municipal | Sprott vs. Invesco Municipal Income | Sprott vs. DWS Municipal Income | Sprott vs. Eaton Vance Municipal |
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Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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