Correlation Between Direxion Auspice and Sprott Focus
Can any of the company-specific risk be diversified away by investing in both Direxion Auspice and Sprott Focus 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 Direxion Auspice and Sprott Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Auspice Broad and Sprott Focus Trust, you can compare the effects of market volatilities on Direxion Auspice and Sprott Focus 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 Direxion Auspice with a short position of Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Auspice and Sprott Focus.
Diversification Opportunities for Direxion Auspice and Sprott Focus
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and Sprott is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Auspice Broad and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust and Direxion Auspice 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 Direxion Auspice Broad are associated (or correlated) with Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of Direxion Auspice i.e., Direxion Auspice and Sprott Focus go up and down completely randomly.
Pair Corralation between Direxion Auspice and Sprott Focus
Considering the 90-day investment horizon Direxion Auspice Broad is expected to under-perform the Sprott Focus. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Auspice Broad is 2.62 times less risky than Sprott Focus. The etf trades about -0.19 of its potential returns per unit of risk. The Sprott Focus Trust is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 780.00 in Sprott Focus Trust on August 30, 2024 and sell it today you would earn a total of 29.00 from holding Sprott Focus Trust or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Auspice Broad vs. Sprott Focus Trust
Performance |
| Timeline |
| Direxion Auspice Broad |
| Sprott Focus Trust |
Direxion Auspice and Sprott Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Auspice and Sprott Focus
The main advantage of trading using opposite Direxion Auspice and Sprott Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Auspice position performs unexpectedly, Sprott Focus 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 Sprott Focus will offset losses from the drop in Sprott Focus' long position.| Direxion Auspice vs. abrdn Bloomberg All | Direxion Auspice vs. iShares Bloomberg Roll | Direxion Auspice vs. abrdn Bloomberg All | Direxion Auspice vs. iShares GSCI Commodity |
| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Invesco High Income | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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