Correlation Between Direxion Daily and Sprott Gold
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Sprott Gold 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 Daily and Sprott Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Gold and Sprott Gold Miners, you can compare the effects of market volatilities on Direxion Daily and Sprott Gold 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 Daily with a short position of Sprott Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Sprott Gold.
Diversification Opportunities for Direxion Daily and Sprott Gold
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Direxion and Sprott is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Gold and Sprott Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Miners and Direxion Daily 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 Daily Gold are associated (or correlated) with Sprott Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Gold Miners has no effect on the direction of Direxion Daily i.e., Direxion Daily and Sprott Gold go up and down completely randomly.
Pair Corralation between Direxion Daily and Sprott Gold
Given the investment horizon of 90 days Direxion Daily Gold is expected to generate 2.04 times more return on investment than Sprott Gold. However, Direxion Daily is 2.04 times more volatile than Sprott Gold Miners. It trades about 0.01 of its potential returns per unit of risk. Sprott Gold Miners is currently generating about 0.01 per unit of risk. If you would invest 4,898 in Direxion Daily Gold on August 26, 2024 and sell it today you would lose (427.00) from holding Direxion Daily Gold or give up 8.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Gold vs. Sprott Gold Miners
Performance |
| Timeline |
| Direxion Daily Gold |
| Sprott Gold Miners |
Direxion Daily and Sprott Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Sprott Gold
The main advantage of trading using opposite Direxion Daily and Sprott Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Sprott Gold 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 Gold will offset losses from the drop in Sprott Gold's long position.| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
| Sprott Gold vs. iShares Silver Trust | Sprott Gold vs. SPDR Gold Shares | Sprott Gold vs. Newmont Goldcorp Corp | Sprott Gold vs. Direxion Daily Gold |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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