Correlation Between Macquarie ETF and Sprott Nickel
Can any of the company-specific risk be diversified away by investing in both Macquarie ETF and Sprott Nickel 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 Macquarie ETF and Sprott Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie ETF Trust and Sprott Nickel Miners, you can compare the effects of market volatilities on Macquarie ETF and Sprott Nickel 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 Macquarie ETF with a short position of Sprott Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie ETF and Sprott Nickel.
Diversification Opportunities for Macquarie ETF and Sprott Nickel
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macquarie and Sprott is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie ETF Trust and Sprott Nickel Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Nickel Miners and Macquarie ETF 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 Macquarie ETF Trust are associated (or correlated) with Sprott Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Nickel Miners has no effect on the direction of Macquarie ETF i.e., Macquarie ETF and Sprott Nickel go up and down completely randomly.
Pair Corralation between Macquarie ETF and Sprott Nickel
Given the investment horizon of 90 days Macquarie ETF Trust is expected to generate 0.69 times more return on investment than Sprott Nickel. However, Macquarie ETF Trust is 1.45 times less risky than Sprott Nickel. It trades about 0.14 of its potential returns per unit of risk. Sprott Nickel Miners is currently generating about -0.25 per unit of risk. If you would invest 2,863 in Macquarie ETF Trust on August 27, 2024 and sell it today you would earn a total of 82.00 from holding Macquarie ETF Trust or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie ETF Trust vs. Sprott Nickel Miners
Performance |
| Timeline |
| Macquarie ETF Trust |
| Sprott Nickel Miners |
Macquarie ETF and Sprott Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie ETF and Sprott Nickel
The main advantage of trading using opposite Macquarie ETF and Sprott Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie ETF position performs unexpectedly, Sprott Nickel 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 Nickel will offset losses from the drop in Sprott Nickel's long position.| Macquarie ETF vs. EA Series Trust | Macquarie ETF vs. EA Series Trust | Macquarie ETF vs. Rumble Inc | Macquarie ETF vs. EA Series Trust |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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