Correlation Between GraniteShares ETF and Sprott Gold

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

By analyzing existing cross correlation between GraniteShares ETF Trust and Sprott Gold Miners, you can compare the effects of market volatilities on GraniteShares ETF and Sprott Gold 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 GraniteShares ETF with a short position of Sprott Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and Sprott Gold.

Diversification Opportunities for GraniteShares ETF and Sprott Gold

-0.43

Correlation Coefficient

GraniteShares ETF  Sprott Gold

Very good diversification

The 3 months correlation between GraniteShares and Sprott is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and Sprott Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Miners and GraniteShares ETF 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 GraniteShares ETF Trust are associated (or correlated) with Sprott Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Gold Miners has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and Sprott Gold go up and down completely randomly.

Pair Corralation between GraniteShares ETF and Sprott Gold

Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 7.51 times more return on investment than Sprott Gold. However, GraniteShares ETF is 7.51 times more volatile than Sprott Gold Miners. It trades about 0.16 of its potential returns per unit of risk. Sprott Gold Miners is currently generating about 0.02 per unit of risk. If you would invest  2,334  in GraniteShares ETF Trust on September 2, 2024 and sell it today you would earn a total of  3,004  from holding GraniteShares ETF Trust or generate 128.71% return on investment over 90 days.

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

GraniteShares ETF Trust  vs.  Sprott Gold Miners

GraniteShares ETF Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, GraniteShares ETF disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sprott Gold Miners

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Miners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Sprott Gold is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares ETF and Sprott Gold

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

The idea behind GraniteShares ETF Trust and Sprott Gold Miners 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.