Correlation Between Sprott Physical and Innovator

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

By analyzing existing cross correlation between Sprott Physical Platinum and Innovator SP 500, you can compare the effects of market volatilities on Sprott Physical and Innovator 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 Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Innovator.

Diversification Opportunities for Sprott Physical and Innovator

0.85

Correlation Coefficient

Sprott Physical  Innovator

Very poor diversification

The 3 months correlation between Sprott and Innovator is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Platinum and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 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 Platinum are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of Sprott Physical i.e., Sprott Physical and Innovator go up and down completely randomly.

Pair Corralation between Sprott Physical and Innovator

Given the investment horizon of 90 days Sprott Physical Platinum is expected to generate 5.49 times more return on investment than Innovator. However, Sprott Physical is 5.49 times more volatile than Innovator SP 500. It trades about 0.18 of its potential returns per unit of risk. Innovator SP 500 is currently generating about 0.2 per unit of risk. If you would invest  963.00  in Sprott Physical Platinum on May 16, 2025 and sell it today you would earn a total of  243.00  from holding Sprott Physical Platinum or generate 25.23% return on investment over 90 days.

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

Sprott Physical Platinum  vs.  Innovator SP 500

Sprott Physical Platinum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Platinum are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Sprott Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Innovator SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Innovator is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sprott Physical and Innovator

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

The idea behind Sprott Physical Platinum and Innovator SP 500 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.