Correlation Between Uniteds and Sprott

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

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

Diversification Opportunities for Uniteds and Sprott

0.2

Correlation Coefficient

Uniteds  Sprott

Modest diversification

The 3 months correlation between Uniteds and Sprott is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Uniteds Limited and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc and Uniteds 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 Uniteds Limited are associated (or correlated) with Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of Uniteds i.e., Uniteds and Sprott go up and down completely randomly.

Pair Corralation between Uniteds and Sprott

Assuming the 90 days trading horizon Uniteds Limited is expected to under-perform the Sprott. In addition to that, Uniteds is 1.96 times more volatile than Sprott Inc. It trades about -0.12 of its total potential returns per unit of risk. Sprott Inc is currently generating about -0.08 per unit of volatility. If you would invest  6,311  in Sprott Inc on December 2, 2024 and sell it today you would lose (174.00) from holding Sprott Inc or give up 2.76% of portfolio value over 90 days.

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

Uniteds Limited  vs.  Sprott Inc

Uniteds Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uniteds Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Uniteds is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sprott Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Sprott is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Uniteds and Sprott

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

The idea behind Uniteds Limited and Sprott Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.