Correlation Between Sprott Junior and Direxion
Can any of the company-specific risk be diversified away by investing in both Sprott Junior and Direxion 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 Junior and Direxion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Junior Uranium and Direxion, you can compare the effects of market volatilities on Sprott Junior and Direxion 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 Junior with a short position of Direxion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Junior and Direxion.
Diversification Opportunities for Sprott Junior and Direxion
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and Direxion is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Junior Uranium and Direxion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion and Sprott Junior 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 Junior Uranium are associated (or correlated) with Direxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion has no effect on the direction of Sprott Junior i.e., Sprott Junior and Direxion go up and down completely randomly.
Pair Corralation between Sprott Junior and Direxion
Given the investment horizon of 90 days Sprott Junior Uranium is expected to generate 26.19 times more return on investment than Direxion. However, Sprott Junior is 26.19 times more volatile than Direxion. It trades about 0.05 of its potential returns per unit of risk. Direxion is currently generating about -0.03 per unit of risk. If you would invest 0.00 in Sprott Junior Uranium on August 25, 2024 and sell it today you would earn a total of 2,415 from holding Sprott Junior Uranium or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.08% |
| Values | Daily Returns |
Sprott Junior Uranium vs. Direxion
Performance |
| Timeline |
| Sprott Junior Uranium |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sprott Junior and Direxion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Junior and Direxion
The main advantage of trading using opposite Sprott Junior and Direxion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Junior position performs unexpectedly, Direxion 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 will offset losses from the drop in Direxion's long position.| Sprott Junior vs. Sprott Junior Copper | Sprott Junior vs. Sprott Energy Transition | Sprott Junior vs. Sprott Lithium Miners | Sprott Junior vs. Sprott Uranium Miners |
| Direxion vs. Sprott Junior Copper | Direxion vs. Sprott Junior Uranium | Direxion vs. Sprott Nickel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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