Correlation Between IShares NASDAQ and Sprott Physical

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

By analyzing existing cross correlation between iShares NASDAQ 100 and Sprott Physical Uranium, you can compare the effects of market volatilities on IShares NASDAQ and Sprott Physical 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 IShares NASDAQ with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and Sprott Physical.

Diversification Opportunities for IShares NASDAQ and Sprott Physical

-0.62

Correlation Coefficient

IShares NASDAQ  Sprott Physical

Excellent diversification

The 3 months correlation between IShares and Sprott is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares NASDAQ 100 and Sprott Physical Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Uranium and IShares NASDAQ 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 iShares NASDAQ 100 are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Uranium has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and Sprott Physical go up and down completely randomly.

Pair Corralation between IShares NASDAQ and Sprott Physical

Assuming the 90 days trading horizon iShares NASDAQ 100 is expected to generate 0.49 times more return on investment than Sprott Physical. However, iShares NASDAQ 100 is 2.04 times less risky than Sprott Physical. It trades about 0.12 of its potential returns per unit of risk. Sprott Physical Uranium is currently generating about -0.11 per unit of risk. If you would invest  5,123  in iShares NASDAQ 100 on September 25, 2024 and sell it today you would earn a total of  282.00  from holding iShares NASDAQ 100 or generate 5.5% return on investment over 90 days.

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

iShares NASDAQ 100  vs.  Sprott Physical Uranium

iShares NASDAQ 100

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares NASDAQ 100 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sprott Physical Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares NASDAQ and Sprott Physical

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

The idea behind iShares NASDAQ 100 and Sprott Physical 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.