Correlation Between Sprott Active and First Trust

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

By analyzing existing cross correlation between Sprott Active Metals and First Trust Exchange, you can compare the effects of market volatilities on Sprott Active and First Trust 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 Active with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Active and First Trust.

Diversification Opportunities for Sprott Active and First Trust

0.23

Correlation Coefficient

Sprott Active  First Trust

Modest diversification

The 3 months correlation between Sprott and First is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Active Metals and First Trust Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Sprott Active 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 Active Metals are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Sprott Active i.e., Sprott Active and First Trust go up and down completely randomly.

Pair Corralation between Sprott Active and First Trust

Given the investment horizon of 90 days Sprott Active is expected to generate 1.76 times less return on investment than First Trust. In addition to that, Sprott Active is 1.57 times more volatile than First Trust Exchange. It trades about 0.13 of its total potential returns per unit of risk. First Trust Exchange is currently generating about 0.35 per unit of volatility. If you would invest  2,408  in First Trust Exchange on September 7, 2025 and sell it today you would earn a total of  316.00  from holding First Trust Exchange or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.48%
Values	Daily Returns

Sprott Active Metals  vs.  First Trust Exchange

Sprott Active Metals

Risk-Adjusted Performance

Fair

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

First Trust Exchange

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, First Trust disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Active and First Trust

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

The idea behind Sprott Active Metals and First Trust Exchange 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..