Correlation Between Ishares Lifepath and Sprott Uranium

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

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

Diversification Opportunities for Ishares Lifepath and Sprott Uranium

-0.5

Correlation Coefficient

Ishares Lifepath  Sprott Uranium

Very good diversification

The 3 months correlation between Ishares and Sprott is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Lifepath Target and Sprott Uranium Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Uranium Miners and Ishares Lifepath 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 Ishares Lifepath Target are associated (or correlated) with Sprott Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Uranium Miners has no effect on the direction of Ishares Lifepath i.e., Ishares Lifepath and Sprott Uranium go up and down completely randomly.

Pair Corralation between Ishares Lifepath and Sprott Uranium

Given the investment horizon of 90 days Ishares Lifepath Target is expected to under-perform the Sprott Uranium. But the etf apears to be less risky and, when comparing its historical volatility, Ishares Lifepath Target is 3.54 times less risky than Sprott Uranium. The etf trades about -0.1 of its potential returns per unit of risk. The Sprott Uranium Miners is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,282  in Sprott Uranium Miners on February 2, 2024 and sell it today you would lose (96.00) from holding Sprott Uranium Miners or give up 1.82% of portfolio value over 90 days.

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

Ishares Lifepath Target  vs.  Sprott Uranium Miners

Ishares Lifepath Target

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Lifepath Target are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ishares Lifepath is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sprott Uranium Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Uranium Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Ishares Lifepath and Sprott Uranium

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

The idea behind Ishares Lifepath Target and Sprott Uranium 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..