Correlation Between Sprott Uranium and IShares MSCI

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

By analyzing existing cross correlation between Sprott Uranium Miners and iShares MSCI New, you can compare the effects of market volatilities on Sprott Uranium and IShares MSCI 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 Uranium with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Uranium and IShares MSCI.

Diversification Opportunities for Sprott Uranium and IShares MSCI

-0.32

Correlation Coefficient

Sprott Uranium  IShares MSCI

Very good diversification

The 3 months correlation between Sprott and IShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Uranium Miners and iShares MSCI New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI New and Sprott Uranium 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 Uranium Miners are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI New has no effect on the direction of Sprott Uranium i.e., Sprott Uranium and IShares MSCI go up and down completely randomly.

Pair Corralation between Sprott Uranium and IShares MSCI

Given the investment horizon of 90 days Sprott Uranium Miners is expected to generate 1.96 times more return on investment than IShares MSCI. However, Sprott Uranium is 1.96 times more volatile than iShares MSCI New. It trades about 0.03 of its potential returns per unit of risk. iShares MSCI New is currently generating about -0.15 per unit of risk. If you would invest  4,591  in Sprott Uranium Miners on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Sprott Uranium Miners or generate 0.72% return on investment over 90 days.

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

Sprott Uranium Miners  vs.  iShares MSCI New

Sprott Uranium Miners

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Uranium Miners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sprott Uranium may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares MSCI New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic 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 Uranium and IShares MSCI

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

The idea behind Sprott Uranium Miners and iShares MSCI New 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.