Correlation Between Sprott Physical and Dividend

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Dividend 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 Dividend 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 Dividend 15 Split, you can compare the effects of market volatilities on Sprott Physical and Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Dividend.

Diversification Opportunities for Sprott Physical and Dividend

0.67

Correlation Coefficient

Sprott Physical  Dividend

Poor diversification

The 3 months correlation between Sprott and Dividend is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of Sprott Physical i.e., Sprott Physical and Dividend go up and down completely randomly.

Pair Corralation between Sprott Physical and Dividend

Assuming the 90 days trading horizon Sprott Physical is expected to generate 2.16 times less return on investment than Dividend. But when comparing it to its historical volatility, Sprott Physical Gold is 1.14 times less risky than Dividend. It trades about 0.15 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Dividend 15 Split on September 12, 2024 and sell it today you would earn a total of  115.00  from holding Dividend 15 Split or generate 21.7% return on investment over 90 days.

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

Sprott Physical Gold  vs.  Dividend 15 Split

Sprott Physical Gold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dividend 15 Split

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dividend displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Dividend

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

The idea behind Sprott Physical Gold and Dividend 15 Split 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.