Correlation Between Sprott Physical and Air Canada

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

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

Diversification Opportunities for Sprott Physical and Air Canada

0.57

Correlation Coefficient

Sprott Physical  Air Canada

Very weak diversification

The 3 months correlation between Sprott and Air is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Silver and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 Silver are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Sprott Physical i.e., Sprott Physical and Air Canada go up and down completely randomly.

Pair Corralation between Sprott Physical and Air Canada

Assuming the 90 days trading horizon Sprott Physical is expected to generate 2.53 times less return on investment than Air Canada. But when comparing it to its historical volatility, Sprott Physical Silver is 1.76 times less risky than Air Canada. It trades about 0.18 of its potential returns per unit of risk. Air Canada is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,397  in Air Canada on April 22, 2025 and sell it today you would earn a total of  702.00  from holding Air Canada or generate 50.25% return on investment over 90 days.

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

Sprott Physical Silver  vs.  Air Canada

Sprott Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sprott Physical displayed solid returns over the last few months and may actually be approaching a breakup point.

Air Canada

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Canada are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Air Canada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott Physical and Air Canada

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

The idea behind Sprott Physical Silver and Air Canada 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.