Correlation Between Sprott Physical and Avino Silver

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Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Avino Silver 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 Physical and Avino Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Physical Gold and Avino Silver Gold, you can compare the effects of market volatilities on Sprott Physical and Avino Silver 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 Physical with a short position of Avino Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Avino Silver.

Diversification Opportunities for Sprott Physical and Avino Silver

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sprott and Avino is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Avino Silver Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avino Silver Gold and Sprott Physical 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 Physical Gold are associated (or correlated) with Avino Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avino Silver Gold has no effect on the direction of Sprott Physical i.e., Sprott Physical and Avino Silver go up and down completely randomly.

Pair Corralation between Sprott Physical and Avino Silver

Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 0.28 times more return on investment than Avino Silver. However, Sprott Physical Gold is 3.54 times less risky than Avino Silver. It trades about 0.03 of its potential returns per unit of risk. Avino Silver Gold is currently generating about -0.09 per unit of risk. If you would invest  2,491  in Sprott Physical Gold on November 24, 2023 and sell it today you would earn a total of  10.00  from holding Sprott Physical Gold or generate 0.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sprott Physical Gold  vs.  Avino Silver Gold

 Performance 
       Timeline  
Sprott Physical Gold 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Avino Silver Gold 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Avino Silver Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Avino Silver is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sprott Physical and Avino Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sprott Physical and Avino Silver

The main advantage of trading using opposite Sprott Physical and Avino Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Avino Silver 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 Avino Silver will offset losses from the drop in Avino Silver's long position.
The idea behind Sprott Physical Gold and Avino Silver Gold 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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