Correlation Between First Trust and Sprott Gold

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

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

Diversification Opportunities for First Trust and Sprott Gold

0.4

Correlation Coefficient

First Trust  Sprott Gold

Very weak diversification

The 3 months correlation between First and Sprott is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Sprott Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Miners and First Trust 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 First Trust NASDAQ 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 Miners has no effect on the direction of First Trust i.e., First Trust and Sprott Gold go up and down completely randomly.

Pair Corralation between First Trust and Sprott Gold

Given the investment horizon of 90 days First Trust NASDAQ is expected to generate 0.84 times more return on investment than Sprott Gold. However, First Trust NASDAQ is 1.19 times less risky than Sprott Gold. It trades about 0.14 of its potential returns per unit of risk. Sprott Gold Miners is currently generating about 0.1 per unit of risk. If you would invest  3,766  in First Trust NASDAQ on September 10, 2025 and sell it today you would earn a total of  826.00  from holding First Trust NASDAQ or generate 21.93% return on investment over 90 days.

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

First Trust NASDAQ  vs.  Sprott Gold Miners

First Trust NASDAQ

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust NASDAQ are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, First Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

Sprott Gold Miners

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Miners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Sprott Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Sprott Gold

The main advantage of trading using opposite First Trust and Sprott Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust NASDAQ and Sprott Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.