Correlation Between Sprott Physical and Hub

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

Diversification Opportunities for Sprott Physical and Hub

-0.87

Correlation Coefficient

Sprott Physical  Hub

Pay attention - limited upside

The 3 months correlation between Sprott and Hub is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Hub Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Group 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 Hub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Group has no effect on the direction of Sprott Physical i.e., Sprott Physical and Hub go up and down completely randomly.

Pair Corralation between Sprott Physical and Hub

Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 0.34 times more return on investment than Hub. However, Sprott Physical Gold is 2.91 times less risky than Hub. It trades about 0.16 of its potential returns per unit of risk. Hub Group is currently generating about -0.13 per unit of risk. If you would invest  3,379  in Sprott Physical Gold on January 18, 2025 and sell it today you would earn a total of  155.00  from holding Sprott Physical Gold or generate 4.59% return on investment over 90 days.

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

Sprott Physical Gold  vs.  Hub Group

Sprott Physical Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sprott Physical displayed solid returns over the last few months and may actually be approaching a breakup point.

Hub Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hub Group 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 fundamental drivers remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sprott Physical and Hub

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

The idea behind Sprott Physical Gold and Hub Group 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..