Correlation Between Sprott Physical and Invesco BulletShares

Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Invesco BulletShares 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 Invesco BulletShares 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 Invesco BulletShares 2027, you can compare the effects of market volatilities on Sprott Physical and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Invesco BulletShares.

Diversification Opportunities for Sprott Physical and Invesco BulletShares

-0.5

Correlation Coefficient

Sprott Physical  Invesco BulletShares

Very good diversification

The 3 months correlation between Sprott and Invesco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Invesco BulletShares 2027 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2027 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2027 has no effect on the direction of Sprott Physical i.e., Sprott Physical and Invesco BulletShares go up and down completely randomly.

Pair Corralation between Sprott Physical and Invesco BulletShares

Considering the 90-day investment horizon Sprott Physical Gold is expected to generate 5.55 times more return on investment than Invesco BulletShares. However, Sprott Physical is 5.55 times more volatile than Invesco BulletShares 2027. It trades about 0.12 of its potential returns per unit of risk. Invesco BulletShares 2027 is currently generating about -0.05 per unit of risk. If you would invest  2,689  in Sprott Physical Gold on March 5, 2025 and sell it today you would earn a total of  320.00  from holding Sprott Physical Gold or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Sprott Physical Gold  vs.  Invesco BulletShares 2027

Sprott Physical Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Invesco BulletShares 2027

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco BulletShares 2027 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Invesco BulletShares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sprott Physical and Invesco BulletShares

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

The idea behind Sprott Physical Gold and Invesco BulletShares 2027 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.