Correlation Between Sprott Focus and Healixa

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

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

Diversification Opportunities for Sprott Focus and Healixa

-0.6

Correlation Coefficient

Sprott Focus  Healixa

Excellent diversification

The 3 months correlation between Sprott and Healixa is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Healixa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healixa and Sprott Focus 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 Focus Trust are associated (or correlated) with Healixa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healixa has no effect on the direction of Sprott Focus i.e., Sprott Focus and Healixa go up and down completely randomly.

Pair Corralation between Sprott Focus and Healixa

Given the investment horizon of 90 days Sprott Focus is expected to generate 1.35 times less return on investment than Healixa. But when comparing it to its historical volatility, Sprott Focus Trust is 15.83 times less risky than Healixa. It trades about 0.08 of its potential returns per unit of risk. Healixa is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Healixa on September 17, 2024 and sell it today you would lose (3.00) from holding Healixa or give up 33.33% of portfolio value over 90 days.

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

Sprott Focus Trust  vs.  Healixa

Sprott Focus Trust

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sprott Focus is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Healixa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sprott Focus and Healixa

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

The idea behind Sprott Focus Trust and Healixa 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.