Correlation Between GraniteShares and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both GraniteShares and FIRST TRUST 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 GraniteShares and FIRST TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GraniteShares 3x Long and FIRST TRUST GLOBAL, you can compare the effects of market volatilities on GraniteShares and FIRST TRUST 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 GraniteShares with a short position of FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and FIRST TRUST.
Diversification Opportunities for GraniteShares and FIRST TRUST
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GraniteShares and FIRST is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL and GraniteShares 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 GraniteShares 3x Long are associated (or correlated) with FIRST TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST TRUST GLOBAL has no effect on the direction of GraniteShares i.e., GraniteShares and FIRST TRUST go up and down completely randomly.
Pair Corralation between GraniteShares and FIRST TRUST
Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 9.39 times more return on investment than FIRST TRUST. However, GraniteShares is 9.39 times more volatile than FIRST TRUST GLOBAL. It trades about 0.6 of its potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about -0.5 per unit of risk. If you would invest 10,647 in GraniteShares 3x Long on September 24, 2024 and sell it today you would earn a total of 3,927 from holding GraniteShares 3x Long or generate 36.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.19% |
| Values | Daily Returns |
GraniteShares 3x Long vs. FIRST TRUST GLOBAL
Performance |
| Timeline |
| GraniteShares 3x Long |
| FIRST TRUST GLOBAL |
GraniteShares and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and FIRST TRUST
The main advantage of trading using opposite GraniteShares and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, FIRST TRUST 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 FIRST TRUST will offset losses from the drop in FIRST TRUST's long position.| GraniteShares vs. Vanguard FTSE Developed | GraniteShares vs. Amundi Index Solutions | GraniteShares vs. Amundi Index Solutions | GraniteShares vs. Albion Venture Capital |
| FIRST TRUST vs. Vanguard FTSE Developed | FIRST TRUST vs. Leverage Shares 2x | FIRST TRUST vs. Amundi Index Solutions | FIRST TRUST vs. Amundi Index Solutions |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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