Correlation Between Sprott and Aimia Srs

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

By analyzing existing cross correlation between Sprott Inc and Aimia Srs 1, you can compare the effects of market volatilities on Sprott and Aimia Srs 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 with a short position of Aimia Srs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott and Aimia Srs.

Diversification Opportunities for Sprott and Aimia Srs

0.89

Correlation Coefficient

Sprott  Aimia Srs

Very poor diversification

The 3 months correlation between Sprott and Aimia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Inc and Aimia Srs 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Srs 1 and Sprott 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 Inc are associated (or correlated) with Aimia Srs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimia Srs 1 has no effect on the direction of Sprott i.e., Sprott and Aimia Srs go up and down completely randomly.

Pair Corralation between Sprott and Aimia Srs

Assuming the 90 days trading horizon Sprott Inc is expected to generate 0.88 times more return on investment than Aimia Srs. However, Sprott Inc is 1.14 times less risky than Aimia Srs. It trades about 0.35 of its potential returns per unit of risk. Aimia Srs 1 is currently generating about 0.17 per unit of risk. If you would invest  7,207  in Sprott Inc on April 25, 2025 and sell it today you would earn a total of  2,523  from holding Sprott Inc or generate 35.01% return on investment over 90 days.

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

Sprott Inc  vs.  Aimia Srs 1

Sprott Inc

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Sprott displayed solid returns over the last few months and may actually be approaching a breakup point.

Aimia Srs 1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aimia Srs 1 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Aimia Srs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprott and Aimia Srs

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

The idea behind Sprott Inc and Aimia Srs 1 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .