Correlation Between Sprott Physical and Sprott

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

Diversification Opportunities for Sprott Physical and Sprott

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sprott and Sprott is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Platinum and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc 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 Platinum are associated (or correlated) with Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of Sprott Physical i.e., Sprott Physical and Sprott go up and down completely randomly.

Pair Corralation between Sprott Physical and Sprott

Given the investment horizon of 90 days Sprott Physical Platinum is expected to under-perform the Sprott. But the etf apears to be less risky and, when comparing its historical volatility, Sprott Physical Platinum is 1.16 times less risky than Sprott. The etf trades about -0.11 of its potential returns per unit of risk. The Sprott Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,193  in Sprott Inc on March 12, 2024 and sell it today you would earn a total of  150.00  from holding Sprott Inc or generate 3.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sprott Physical Platinum  vs.  Sprott Inc

 Performance 
       Timeline  
Sprott Physical Platinum 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sprott Physical Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Sprott Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Sprott demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sprott Physical and Sprott Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sprott Physical and Sprott

The main advantage of trading using opposite Sprott Physical and Sprott positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Sprott 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 will offset losses from the drop in Sprott's long position.
The idea behind Sprott Physical Platinum and Sprott Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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