Correlation Between Sprott and United States

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

By analyzing existing cross correlation between Sprott Inc and United States 12, you can compare the effects of market volatilities on Sprott and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott and United States.

Diversification Opportunities for Sprott and United States

0.04

Correlation Coefficient

Sprott  United States

Significant diversification

The 3 months correlation between Sprott and United is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Inc and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of Sprott i.e., Sprott and United States go up and down completely randomly.

Pair Corralation between Sprott and United States

Considering the 90-day investment horizon Sprott Inc is expected to generate 1.0 times more return on investment than United States. However, Sprott is 1.0 times more volatile than United States 12. It trades about 0.09 of its potential returns per unit of risk. United States 12 is currently generating about 0.02 per unit of risk. If you would invest  4,125  in Sprott Inc on September 13, 2024 and sell it today you would earn a total of  428.00  from holding Sprott Inc or generate 10.38% return on investment over 90 days.

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

Sprott Inc  vs.  United States 12

Sprott Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 6 (%) 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 January 2025.

United States 12

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States 12 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, United States is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sprott and United States

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

The idea behind Sprott Inc and United States 12 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.