Correlation Between Sprott Focus and BZAM

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

Diversification Opportunities for Sprott Focus and BZAM

-0.44

Correlation Coefficient

Sprott Focus  BZAM

Very good diversification

The 3 months correlation between Sprott and BZAM is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM 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 BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Sprott Focus i.e., Sprott Focus and BZAM go up and down completely randomly.

Pair Corralation between Sprott Focus and BZAM

If you would invest  0.00  in BZAM on September 24, 2024 and sell it today you would earn a total of  0.00  from holding BZAM or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Sprott Focus Trust  vs.  BZAM

Sprott Focus Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Focus Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

BZAM

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BZAM are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, BZAM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Focus and BZAM

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

The idea behind Sprott Focus Trust and BZAM 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.