Correlation Between Sprott Physical and Fiera Capital

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

Diversification Opportunities for Sprott Physical and Fiera Capital

0.76

Correlation Coefficient

Sprott Physical  Fiera Capital

Poor diversification

The 3 months correlation between Sprott and Fiera is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Fiera Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiera Capital 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 Fiera Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiera Capital has no effect on the direction of Sprott Physical i.e., Sprott Physical and Fiera Capital go up and down completely randomly.

Pair Corralation between Sprott Physical and Fiera Capital

Assuming the 90 days trading horizon Sprott Physical is expected to generate 3.71 times less return on investment than Fiera Capital. But when comparing it to its historical volatility, Sprott Physical Gold is 2.48 times less risky than Fiera Capital. It trades about 0.15 of its potential returns per unit of risk. Fiera Capital is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  717.00  in Fiera Capital on September 3, 2024 and sell it today you would earn a total of  256.00  from holding Fiera Capital or generate 35.7% 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.  Fiera Capital

Sprott Physical Gold

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 11 (%) 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.

Fiera Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fiera Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fiera Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Fiera Capital

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

The idea behind Sprott Physical Gold and Fiera Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.