Correlation Between GraniteShares and WisdomTree Short
Can any of the company-specific risk be diversified away by investing in both GraniteShares and WisdomTree Short 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 WisdomTree Short 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 WisdomTree Short GBP, you can compare the effects of market volatilities on GraniteShares and WisdomTree Short 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 WisdomTree Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and WisdomTree Short.
Diversification Opportunities for GraniteShares and WisdomTree Short
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GraniteShares and WisdomTree is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and WisdomTree Short GBP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Short GBP 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 WisdomTree Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Short GBP has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree Short go up and down completely randomly.
Pair Corralation between GraniteShares and WisdomTree Short
Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 11.74 times more return on investment than WisdomTree Short. However, GraniteShares is 11.74 times more volatile than WisdomTree Short GBP. It trades about 0.17 of its potential returns per unit of risk. WisdomTree Short GBP is currently generating about 0.02 per unit of risk. If you would invest 1,074,000 in GraniteShares 3x Long on November 7, 2024 and sell it today you would earn a total of 222,050 from holding GraniteShares 3x Long or generate 20.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares 3x Long vs. WisdomTree Short GBP
Performance |
| Timeline |
| GraniteShares 3x Long |
| WisdomTree Short GBP |
GraniteShares and WisdomTree Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and WisdomTree Short
The main advantage of trading using opposite GraniteShares and WisdomTree Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, WisdomTree Short 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 WisdomTree Short will offset losses from the drop in WisdomTree Short's long position.| GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. GraniteShares 3x Short |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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