Correlation Between Sprott Uranium and Sprott Junior

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

Diversification Opportunities for Sprott Uranium and Sprott Junior

1.0

Correlation Coefficient

Sprott Uranium  Sprott Junior

No risk reduction

The 3 months correlation between Sprott and Sprott is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Uranium Miners and Sprott Junior Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Uranium 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 Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Uranium has no effect on the direction of Sprott Uranium i.e., Sprott Uranium and Sprott Junior go up and down completely randomly.

Pair Corralation between Sprott Uranium and Sprott Junior

Given the investment horizon of 90 days Sprott Uranium Miners is expected to generate 0.78 times more return on investment than Sprott Junior. However, Sprott Uranium Miners is 1.29 times less risky than Sprott Junior. It trades about -0.08 of its potential returns per unit of risk. Sprott Junior Uranium is currently generating about -0.07 per unit of risk. If you would invest  4,038  in Sprott Uranium Miners on December 25, 2024 and sell it today you would lose (553.00) from holding Sprott Uranium Miners or give up 13.69% of portfolio value over 90 days.

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

Sprott Uranium Miners  vs.  Sprott Junior Uranium

Sprott Uranium Miners

Risk-Adjusted Performance

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 weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Sprott Junior Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Junior Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Etf's basic indicators remain relatively steady which may send shares a bit higher in April 2025. The new chaos may also be a sign of medium-term up-swing for the ETF firm stakeholders.

Pair Trading with Sprott Uranium and Sprott Junior

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

The idea behind Sprott Uranium Miners and Sprott Junior Uranium 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.