Correlation Between Sprott Physical and Seabridge Gold

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

Diversification Opportunities for Sprott Physical and Seabridge Gold

0.21

Correlation Coefficient

Sprott Physical  Seabridge Gold

Modest diversification

The 3 months correlation between Sprott and Seabridge is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold 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 Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Sprott Physical i.e., Sprott Physical and Seabridge Gold go up and down completely randomly.

Pair Corralation between Sprott Physical and Seabridge Gold

Assuming the 90 days trading horizon Sprott Physical Gold is expected to under-perform the Seabridge Gold. But the stock apears to be less risky and, when comparing its historical volatility, Sprott Physical Gold is 1.97 times less risky than Seabridge Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Seabridge Gold is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,717  in Seabridge Gold on April 22, 2025 and sell it today you would earn a total of  437.00  from holding Seabridge Gold or generate 25.45% return on investment over 90 days.

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

Sprott Physical Gold  vs.  Seabridge Gold

Sprott Physical Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Seabridge Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seabridge Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Seabridge Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Seabridge Gold

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

The idea behind Sprott Physical Gold and Seabridge Gold 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.