Correlation Between Sprott Gold and Wasatch Emerging

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

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

Diversification Opportunities for Sprott Gold and Wasatch Emerging

0.28

Correlation Coefficient

Sprott Gold  Wasatch Emerging

Modest diversification

The 3 months correlation between Sprott and Wasatch is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Wasatch Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Emerging Markets and Sprott Gold 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 Gold Equity are associated (or correlated) with Wasatch Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Emerging Markets has no effect on the direction of Sprott Gold i.e., Sprott Gold and Wasatch Emerging go up and down completely randomly.

Pair Corralation between Sprott Gold and Wasatch Emerging

Assuming the 90 days horizon Sprott Gold Equity is expected to under-perform the Wasatch Emerging. In addition to that, Sprott Gold is 1.55 times more volatile than Wasatch Emerging Markets. It trades about -0.08 of its total potential returns per unit of risk. Wasatch Emerging Markets is currently generating about 0.13 per unit of volatility. If you would invest  1,662  in Wasatch Emerging Markets on February 7, 2024 and sell it today you would earn a total of  43.00  from holding Wasatch Emerging Markets or generate 2.59% return on investment over 90 days.

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

Sprott Gold Equity  vs.  Wasatch Emerging Markets

Sprott Gold Equity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish essential indicators, Sprott Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Wasatch Emerging Markets

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wasatch Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sprott Gold and Wasatch Emerging

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

The idea behind Sprott Gold Equity and Wasatch Emerging Markets 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.