Correlation Between Teton Westwood and Sprott Gold

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

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

Diversification Opportunities for Teton Westwood and Sprott Gold

0.75

Correlation Coefficient

Teton Westwood  Sprott Gold

Poor diversification

The 3 months correlation between Teton and Sprott is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Teton Westwood Equity and Sprott Gold Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Equity and Teton Westwood 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 Teton Westwood Equity are associated (or correlated) with Sprott Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Gold Equity has no effect on the direction of Teton Westwood i.e., Teton Westwood and Sprott Gold go up and down completely randomly.

Pair Corralation between Teton Westwood and Sprott Gold

Assuming the 90 days horizon Teton Westwood is expected to generate 5.79 times less return on investment than Sprott Gold. But when comparing it to its historical volatility, Teton Westwood Equity is 2.02 times less risky than Sprott Gold. It trades about 0.02 of its potential returns per unit of risk. Sprott Gold Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,098  in Sprott Gold Equity on August 13, 2024 and sell it today you would earn a total of  1,584  from holding Sprott Gold Equity or generate 38.65% return on investment over 90 days.

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

Teton Westwood Equity  vs.  Sprott Gold Equity

Teton Westwood Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teton Westwood Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Teton Westwood may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Sprott Gold Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish essential indicators, Sprott Gold may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Teton Westwood and Sprott Gold

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

The idea behind Teton Westwood Equity and Sprott Gold Equity 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.