Correlation Between Sprott Physical and EHealth

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

Diversification Opportunities for Sprott Physical and EHealth

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sprott and EHealth is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and EHealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHealth 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 EHealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHealth has no effect on the direction of Sprott Physical i.e., Sprott Physical and EHealth go up and down completely randomly.

Pair Corralation between Sprott Physical and EHealth

Considering the 90-day investment horizon Sprott Physical Gold is expected to generate 0.31 times more return on investment than EHealth. However, Sprott Physical Gold is 3.2 times less risky than EHealth. It trades about 0.41 of its potential returns per unit of risk. EHealth is currently generating about -0.13 per unit of risk. If you would invest  1,844  in Sprott Physical Gold on December 29, 2023 and sell it today you would earn a total of  163.00  from holding Sprott Physical Gold or generate 8.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sprott Physical Gold  vs.  EHealth

 Performance 
       Timeline  
Sprott Physical Gold 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
EHealth 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days EHealth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Sprott Physical and EHealth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sprott Physical and EHealth

The main advantage of trading using opposite Sprott Physical and EHealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, EHealth 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 EHealth will offset losses from the drop in EHealth's long position.
The idea behind Sprott Physical Gold and EHealth 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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