Correlation Between Sprott Nickel and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Sprott Nickel and Direxion Daily 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 Nickel and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Nickel Miners and Direxion Daily Gold, you can compare the effects of market volatilities on Sprott Nickel and Direxion Daily 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 Nickel with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Nickel and Direxion Daily.
Diversification Opportunities for Sprott Nickel and Direxion Daily
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and Direxion is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and Direxion Daily Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Gold and Sprott Nickel 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 Nickel Miners are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Gold has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and Direxion Daily go up and down completely randomly.
Pair Corralation between Sprott Nickel and Direxion Daily
Given the investment horizon of 90 days Sprott Nickel is expected to generate 1.5 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Sprott Nickel Miners is 2.34 times less risky than Direxion Daily. It trades about 0.17 of its potential returns per unit of risk. Direxion Daily Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,830 in Direxion Daily Gold on March 21, 2025 and sell it today you would earn a total of 1,938 from holding Direxion Daily Gold or generate 33.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Nickel Miners vs. Direxion Daily Gold
Performance |
| Timeline |
| Sprott Nickel Miners |
| Direxion Daily Gold |
Sprott Nickel and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Nickel and Direxion Daily
The main advantage of trading using opposite Sprott Nickel and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Nickel position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| Sprott Nickel vs. iShares Dividend and | Sprott Nickel vs. Martin Currie Sustainable | Sprott Nickel vs. AdvisorShares Gerber Kawasaki | Sprott Nickel vs. Amplify ETF Trust |
| Direxion Daily vs. Direxion Daily Gold | Direxion Daily vs. Direxion Daily Junior | Direxion Daily vs. Direxion Daily Junior | Direxion Daily vs. VanEck Gold Miners |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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