Correlation Between Sprott and Allianzgi Equity

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

By analyzing existing cross correlation between Sprott Inc and Allianzgi Equity Convertible, you can compare the effects of market volatilities on Sprott and Allianzgi Equity 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 Allianzgi Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott and Allianzgi Equity.

Diversification Opportunities for Sprott and Allianzgi Equity

-0.13

Correlation Coefficient

Sprott  Allianzgi Equity

Good diversification

The 3 months correlation between Sprott and Allianzgi is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Inc and Allianzgi Equity Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Equity Con 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 Allianzgi Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Equity Con has no effect on the direction of Sprott i.e., Sprott and Allianzgi Equity go up and down completely randomly.

Pair Corralation between Sprott and Allianzgi Equity

Considering the 90-day investment horizon Sprott Inc is expected to generate 1.56 times more return on investment than Allianzgi Equity. However, Sprott is 1.56 times more volatile than Allianzgi Equity Convertible. It trades about 0.08 of its potential returns per unit of risk. Allianzgi Equity Convertible is currently generating about -0.11 per unit of risk. If you would invest  4,114  in Sprott Inc on December 28, 2024 and sell it today you would earn a total of  319.00  from holding Sprott Inc or generate 7.75% return on investment over 90 days.

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

Sprott Inc  vs.  Allianzgi Equity Convertible

Sprott Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Sprott may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Allianzgi Equity Con

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Equity Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest inconsistent performance, the Fund's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Sprott and Allianzgi Equity

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

The idea behind Sprott Inc and Allianzgi Equity Convertible 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.