Correlation Between Sprott Physical and Apple

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

Diversification Opportunities for Sprott Physical and Apple

0.2

Correlation Coefficient

Sprott Physical  Apple

Modest diversification

The 3 months correlation between Sprott and Apple is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Sprott Physical i.e., Sprott Physical and Apple go up and down completely randomly.

Pair Corralation between Sprott Physical and Apple

Assuming the 90 days trading horizon Sprott Physical is expected to generate 5.9 times less return on investment than Apple. In addition to that, Sprott Physical is 1.12 times more volatile than Apple Inc CDR. It trades about 0.03 of its total potential returns per unit of risk. Apple Inc CDR is currently generating about 0.19 per unit of volatility. If you would invest  3,177  in Apple Inc CDR on September 16, 2024 and sell it today you would earn a total of  456.00  from holding Apple Inc CDR or generate 14.35% return on investment over 90 days.

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

Sprott Physical Gold  vs.  Apple Inc CDR

Sprott Physical Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Apple Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Apple

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

The idea behind Sprott Physical Gold and Apple Inc CDR 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..