Correlation Between Sprott Gold and First Trust

Can any of the company-specific risk be diversified away by investing in both Sprott Gold 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 Gold 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 Gold Miners and First Trust NASDAQ, you can compare the effects of market volatilities on Sprott Gold 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 Gold with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and First Trust.

Diversification Opportunities for Sprott Gold and First Trust

0.79

Correlation Coefficient

Sprott Gold  First Trust

Poor diversification

The 3 months correlation between Sprott and First is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Miners and First Trust NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ and Sprott Gold 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 Gold Miners 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 NASDAQ has no effect on the direction of Sprott Gold i.e., Sprott Gold and First Trust go up and down completely randomly.

Pair Corralation between Sprott Gold and First Trust

Given the investment horizon of 90 days Sprott Gold is expected to generate 1.16 times less return on investment than First Trust. In addition to that, Sprott Gold is 1.17 times more volatile than First Trust NASDAQ. It trades about 0.15 of its total potential returns per unit of risk. First Trust NASDAQ is currently generating about 0.2 per unit of volatility. If you would invest  3,608  in First Trust NASDAQ on August 12, 2025 and sell it today you would earn a total of  1,107  from holding First Trust NASDAQ or generate 30.68% return on investment over 90 days.

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

Sprott Gold Miners  vs.  First Trust NASDAQ

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 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Sprott Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

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 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, First Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Gold and First Trust

The main advantage of trading using opposite Sprott Gold and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold 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 Gold Miners and First Trust NASDAQ 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.