Correlation Between SPDR SP and Sprott Junior

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

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

Diversification Opportunities for SPDR SP and Sprott Junior

0.52

Correlation Coefficient

SPDR SP  Sprott Junior

Very weak diversification

The 3 months correlation between SPDR and Sprott is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Metals 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 SPDR SP 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 SPDR SP Metals 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 SPDR SP i.e., SPDR SP and Sprott Junior go up and down completely randomly.

Pair Corralation between SPDR SP and Sprott Junior

Considering the 90-day investment horizon SPDR SP Metals is expected to generate 0.48 times more return on investment than Sprott Junior. However, SPDR SP Metals is 2.08 times less risky than Sprott Junior. It trades about 0.04 of its potential returns per unit of risk. Sprott Junior Uranium is currently generating about -0.09 per unit of risk. If you would invest  5,662  in SPDR SP Metals on December 27, 2024 and sell it today you would earn a total of  171.00  from holding SPDR SP Metals or generate 3.02% return on investment over 90 days.

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

SPDR SP Metals  vs.  Sprott Junior Uranium

SPDR SP Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, SPDR SP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 SPDR SP and Sprott Junior

The main advantage of trading using opposite SPDR SP and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SPDR SP Metals 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.