Correlation Between Sprott Physical and Global X

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

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

Diversification Opportunities for Sprott Physical and Global X

0.22

Correlation Coefficient

Sprott Physical  Global X

Modest diversification

The 3 months correlation between Sprott and Global is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Uranium and Global X Seasonal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Seasonal 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 Uranium are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Seasonal has no effect on the direction of Sprott Physical i.e., Sprott Physical and Global X go up and down completely randomly.

Pair Corralation between Sprott Physical and Global X

Assuming the 90 days trading horizon Sprott Physical Uranium is expected to under-perform the Global X. In addition to that, Sprott Physical is 2.87 times more volatile than Global X Seasonal. It trades about -0.08 of its total potential returns per unit of risk. Global X Seasonal is currently generating about 0.02 per unit of volatility. If you would invest  3,119  in Global X Seasonal on October 22, 2024 and sell it today you would earn a total of  32.00  from holding Global X Seasonal or generate 1.03% return on investment over 90 days.

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

Sprott Physical Uranium  vs.  Global X Seasonal

Sprott Physical Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Global X Seasonal

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Seasonal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and Global X

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

The idea behind Sprott Physical Uranium and Global X Seasonal 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.