Correlation Between Sprott Nickel and Xtrackers RREEF
Can any of the company-specific risk be diversified away by investing in both Sprott Nickel and Xtrackers RREEF 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 Xtrackers RREEF 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 Xtrackers RREEF Global, you can compare the effects of market volatilities on Sprott Nickel and Xtrackers RREEF 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 Xtrackers RREEF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Nickel and Xtrackers RREEF.
Diversification Opportunities for Sprott Nickel and Xtrackers RREEF
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Xtrackers is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and Xtrackers RREEF Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers RREEF Global 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 Xtrackers RREEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers RREEF Global has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and Xtrackers RREEF go up and down completely randomly.
Pair Corralation between Sprott Nickel and Xtrackers RREEF
Given the investment horizon of 90 days Sprott Nickel Miners is expected to under-perform the Xtrackers RREEF. In addition to that, Sprott Nickel is 1.63 times more volatile than Xtrackers RREEF Global. It trades about -0.05 of its total potential returns per unit of risk. Xtrackers RREEF Global is currently generating about 0.04 per unit of volatility. If you would invest 2,476 in Xtrackers RREEF Global on August 27, 2024 and sell it today you would earn a total of 149.00 from holding Xtrackers RREEF Global or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 44.81% |
| Values | Daily Returns |
Sprott Nickel Miners vs. Xtrackers RREEF Global
Performance |
| Timeline |
| Sprott Nickel Miners |
| Xtrackers RREEF Global |
Sprott Nickel and Xtrackers RREEF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Nickel and Xtrackers RREEF
The main advantage of trading using opposite Sprott Nickel and Xtrackers RREEF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Nickel position performs unexpectedly, Xtrackers RREEF 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 Xtrackers RREEF will offset losses from the drop in Xtrackers RREEF's long position.The idea behind Sprott Nickel Miners and Xtrackers RREEF Global 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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