Correlation Between Sprott Junior and Themes Gold

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

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

Diversification Opportunities for Sprott Junior and Themes Gold

0.97

Correlation Coefficient

Sprott Junior  Themes Gold

Almost no diversification

The 3 months correlation between Sprott and Themes is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Junior Gold and Themes Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Gold Miners and Sprott Junior 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 Junior Gold are associated (or correlated) with Themes Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Gold Miners has no effect on the direction of Sprott Junior i.e., Sprott Junior and Themes Gold go up and down completely randomly.

Pair Corralation between Sprott Junior and Themes Gold

Given the investment horizon of 90 days Sprott Junior Gold is expected to generate 0.9 times more return on investment than Themes Gold. However, Sprott Junior Gold is 1.11 times less risky than Themes Gold. It trades about 0.06 of its potential returns per unit of risk. Themes Gold Miners is currently generating about 0.05 per unit of risk. If you would invest  3,476  in Sprott Junior Gold on August 30, 2024 and sell it today you would earn a total of  235.00  from holding Sprott Junior Gold or generate 6.76% return on investment over 90 days.

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

Sprott Junior Gold  vs.  Themes Gold Miners

Sprott Junior Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Junior Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Sprott Junior may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Themes Gold Miners

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Themes Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak primary indicators, Themes Gold may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Sprott Junior and Themes Gold

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

The idea behind Sprott Junior Gold and Themes 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.