Correlation Between Sprott Uranium and First Trust

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

Diversification Opportunities for Sprott Uranium and First Trust

-0.43

Correlation Coefficient

Sprott Uranium  First Trust

Very good diversification

The 3 months correlation between Sprott and First is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Uranium Miners and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Sprott Uranium 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 Uranium 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 Indxx has no effect on the direction of Sprott Uranium i.e., Sprott Uranium and First Trust go up and down completely randomly.

Pair Corralation between Sprott Uranium and First Trust

Given the investment horizon of 90 days Sprott Uranium Miners is expected to generate 3.37 times more return on investment than First Trust. However, Sprott Uranium is 3.37 times more volatile than First Trust Indxx. It trades about 0.21 of its potential returns per unit of risk. First Trust Indxx is currently generating about -0.06 per unit of risk. If you would invest  4,444  in Sprott Uranium Miners on July 9, 2025 and sell it today you would earn a total of  1,638  from holding Sprott Uranium Miners or generate 36.86% return on investment over 90 days.

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

Sprott Uranium Miners  vs.  First Trust Indxx

Sprott Uranium Miners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Uranium Miners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sprott Uranium displayed solid returns over the last few months and may actually be approaching a breakup point.

First Trust Indxx

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Indxx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sprott Uranium and First Trust

The main advantage of trading using opposite Sprott Uranium and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Uranium 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 Uranium Miners and First Trust Indxx 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.