Correlation Between Global X and Sprott Physical

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

By analyzing existing cross correlation between Global X Silver and Sprott Physical Silver, you can compare the effects of market volatilities on Global X and Sprott Physical 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 Global X with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Sprott Physical.

Diversification Opportunities for Global X and Sprott Physical

0.9

Correlation Coefficient

Global X  Sprott Physical

Almost no diversification

The 3 months correlation between Global and Sprott is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global X Silver and Sprott Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Silver and Global X 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 Global X Silver are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Silver has no effect on the direction of Global X i.e., Global X and Sprott Physical go up and down completely randomly.

Pair Corralation between Global X and Sprott Physical

Considering the 90-day investment horizon Global X Silver is expected to under-perform the Sprott Physical. In addition to that, Global X is 1.63 times more volatile than Sprott Physical Silver. It trades about -0.12 of its total potential returns per unit of risk. Sprott Physical Silver is currently generating about -0.09 per unit of volatility. If you would invest  1,058  in Sprott Physical Silver on October 9, 2024 and sell it today you would lose (58.00) from holding Sprott Physical Silver or give up 5.48% of portfolio value over 90 days.

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

Global X Silver  vs.  Sprott Physical Silver

Global X Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Global X is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Sprott Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Sprott Physical is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Global X and Sprott Physical

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

The idea behind Global X Silver and Sprott Physical Silver 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.