Correlation Between Sprott Physical and GraniteShares Gold

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

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

Diversification Opportunities for Sprott Physical and GraniteShares Gold

0.65

Correlation Coefficient

Sprott Physical  GraniteShares Gold

Poor diversification

The 3 months correlation between Sprott and GraniteShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Platinum and GraniteShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares Gold Trust and Sprott Physical 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 Physical Platinum are associated (or correlated) with GraniteShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares Gold Trust has no effect on the direction of Sprott Physical i.e., Sprott Physical and GraniteShares Gold go up and down completely randomly.

Pair Corralation between Sprott Physical and GraniteShares Gold

Given the investment horizon of 90 days Sprott Physical Platinum is expected to under-perform the GraniteShares Gold. In addition to that, Sprott Physical is 1.27 times more volatile than GraniteShares Gold Trust. It trades about -0.2 of its total potential returns per unit of risk. GraniteShares Gold Trust is currently generating about 0.01 per unit of volatility. If you would invest  2,707  in GraniteShares Gold Trust on October 27, 2024 and sell it today you would earn a total of  11.00  from holding GraniteShares Gold Trust or generate 0.41% return on investment over 90 days.

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

Sprott Physical Platinum  vs.  GraniteShares Gold Trust

Sprott Physical Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

GraniteShares Gold Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GraniteShares Gold Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GraniteShares Gold is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sprott Physical and GraniteShares Gold

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

The idea behind Sprott Physical Platinum and GraniteShares Gold Trust 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.