Correlation Between Sprott Physical and Abrdn Physical

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Abrdn 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 Sprott Physical and Abrdn Physical 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 abrdn Physical Palladium, you can compare the effects of market volatilities on Sprott Physical and Abrdn 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 Sprott Physical with a short position of Abrdn Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Abrdn Physical.

Diversification Opportunities for Sprott Physical and Abrdn Physical

0.93

Correlation Coefficient

Sprott Physical  Abrdn Physical

Almost no diversification

The 3 months correlation between Sprott and Abrdn is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Platinum and abrdn Physical Palladium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Physical Palladium 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 Abrdn Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Physical Palladium has no effect on the direction of Sprott Physical i.e., Sprott Physical and Abrdn Physical go up and down completely randomly.

Pair Corralation between Sprott Physical and Abrdn Physical

Given the investment horizon of 90 days Sprott Physical Platinum is expected to generate 0.7 times more return on investment than Abrdn Physical. However, Sprott Physical Platinum is 1.43 times less risky than Abrdn Physical. It trades about -0.02 of its potential returns per unit of risk. abrdn Physical Palladium is currently generating about -0.02 per unit of risk. If you would invest  995.00  in Sprott Physical Platinum on October 12, 2024 and sell it today you would lose (74.00) from holding Sprott Physical Platinum or give up 7.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.47%
Values	Daily Returns

Sprott Physical Platinum  vs.  abrdn Physical Palladium

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 latest uncertain performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

abrdn Physical Palladium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days abrdn Physical Palladium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Sprott Physical and Abrdn Physical

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

The idea behind Sprott Physical Platinum and abrdn Physical Palladium 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.