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 Regional 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

-0.43

Correlation Coefficient

Direxion Daily  Sprott Gold

Very good diversification

The 3 months correlation between Direxion and Sprott is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional 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 Regional 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 Regional is expected to under-perform the Sprott Gold. In addition to that, Direxion Daily is 2.48 times more volatile than Sprott Gold Miners. It trades about -0.05 of its total potential returns per unit of risk. Sprott Gold Miners is currently generating about 0.3 per unit of volatility. If you would invest  2,752  in Sprott Gold Miners on December 29, 2024 and sell it today you would earn a total of  1,012  from holding Sprott Gold Miners or generate 36.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Direxion Daily Regional  vs.  Sprott Gold Miners

Direxion Daily Regional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Regional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Sprott Gold Miners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Miners are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish fundamental indicators, Sprott Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Direxion Daily Regional and Sprott Gold Miners 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.