Correlation Between Sprott Physical and SPDR SP

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and SPDR SP 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 SPDR SP 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 SPDR SP Transportation, you can compare the effects of market volatilities on Sprott Physical and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and SPDR SP.

Diversification Opportunities for Sprott Physical and SPDR SP

-0.44

Correlation Coefficient

Sprott Physical  SPDR SP

Very good diversification

The 3 months correlation between Sprott and SPDR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Platinum and SPDR SP Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Transportation 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Transportation has no effect on the direction of Sprott Physical i.e., Sprott Physical and SPDR SP go up and down completely randomly.

Pair Corralation between Sprott Physical and SPDR SP

Given the investment horizon of 90 days Sprott Physical is expected to generate 2.28 times less return on investment than SPDR SP. In addition to that, Sprott Physical is 1.23 times more volatile than SPDR SP Transportation. It trades about 0.1 of its total potential returns per unit of risk. SPDR SP Transportation is currently generating about 0.28 per unit of volatility. If you would invest  8,637  in SPDR SP Transportation on October 23, 2024 and sell it today you would earn a total of  384.00  from holding SPDR SP Transportation or generate 4.45% return on investment over 90 days.

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

Sprott Physical Platinum  vs.  SPDR SP Transportation

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.

SPDR SP Transportation

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Transportation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sprott Physical and SPDR SP

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

The idea behind Sprott Physical Platinum and SPDR SP Transportation 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.