Correlation Between Sprott Uranium and Goldman Sachs

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

Diversification Opportunities for Sprott Uranium and Goldman Sachs

-0.32

Correlation Coefficient

Sprott Uranium  Goldman Sachs

Very good diversification

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

Pair Corralation between Sprott Uranium and Goldman Sachs

Given the investment horizon of 90 days Sprott Uranium Miners is expected to under-perform the Goldman Sachs. In addition to that, Sprott Uranium is 2.49 times more volatile than Goldman Sachs MarketBeta. It trades about -0.17 of its total potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about -0.15 per unit of volatility. If you would invest  5,273  in Goldman Sachs MarketBeta on October 12, 2024 and sell it today you would lose (152.00) from holding Goldman Sachs MarketBeta or give up 2.88% of portfolio value over 90 days.

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

Sprott Uranium Miners  vs.  Goldman Sachs MarketBeta

Sprott Uranium Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Uranium Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Goldman Sachs MarketBeta

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs MarketBeta are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sprott Uranium and Goldman Sachs

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

The idea behind Sprott Uranium Miners and Goldman Sachs MarketBeta 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.