Correlation Between LS 1x and GraniteShares
Can any of the company-specific risk be diversified away by investing in both LS 1x and GraniteShares 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 LS 1x and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS 1x Amazon and GraniteShares 3x Long, you can compare the effects of market volatilities on LS 1x and GraniteShares 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 LS 1x with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS 1x and GraniteShares.
Diversification Opportunities for LS 1x and GraniteShares
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1AMZ and GraniteShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LS 1x Amazon and GraniteShares 3x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Long and LS 1x 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 LS 1x Amazon are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Long has no effect on the direction of LS 1x i.e., LS 1x and GraniteShares go up and down completely randomly.
Pair Corralation between LS 1x and GraniteShares
Assuming the 90 days trading horizon LS 1x is expected to generate 2.33 times less return on investment than GraniteShares. But when comparing it to its historical volatility, LS 1x Amazon is 1.9 times less risky than GraniteShares. It trades about 0.14 of its potential returns per unit of risk. GraniteShares 3x Long is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,883 in GraniteShares 3x Long on August 28, 2024 and sell it today you would earn a total of 899.00 from holding GraniteShares 3x Long or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS 1x Amazon vs. GraniteShares 3x Long
Performance |
| Timeline |
| LS 1x Amazon |
| GraniteShares 3x Long |
LS 1x and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS 1x and GraniteShares
The main advantage of trading using opposite LS 1x and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 1x position performs unexpectedly, GraniteShares 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 GraniteShares will offset losses from the drop in GraniteShares' long position.| LS 1x vs. Scottish Mortgage Investment | LS 1x vs. VinaCapital Vietnam Opportunity | LS 1x vs. Edinburgh Worldwide Investment | LS 1x vs. Baillie Gifford Growth |
| GraniteShares vs. WisdomTree SP 500 | GraniteShares vs. WisdomTree Silver 3x | GraniteShares vs. Lyxor 10Y Inflation | GraniteShares vs. GraniteShares 3x Short |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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