Correlation Between GraniteShares and GraniteShares FAANG
Can any of the company-specific risk be diversified away by investing in both GraniteShares and GraniteShares FAANG 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 GraniteShares FAANG 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 GraniteShares FAANG ETC, you can compare the effects of market volatilities on GraniteShares and GraniteShares FAANG 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 GraniteShares FAANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and GraniteShares FAANG.
Diversification Opportunities for GraniteShares and GraniteShares FAANG
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GraniteShares and GraniteShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and GraniteShares FAANG ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares FAANG ETC 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 GraniteShares FAANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares FAANG ETC has no effect on the direction of GraniteShares i.e., GraniteShares and GraniteShares FAANG go up and down completely randomly.
Pair Corralation between GraniteShares and GraniteShares FAANG
Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 5.43 times more return on investment than GraniteShares FAANG. However, GraniteShares is 5.43 times more volatile than GraniteShares FAANG ETC. It trades about 0.09 of its potential returns per unit of risk. GraniteShares FAANG ETC is currently generating about 0.13 per unit of risk. If you would invest 2,337 in GraniteShares 3x Long on August 24, 2024 and sell it today you would earn a total of 4,108 from holding GraniteShares 3x Long or generate 175.78% 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. GraniteShares FAANG ETC
Performance |
| Timeline |
| GraniteShares 3x Long |
| GraniteShares FAANG ETC |
GraniteShares and GraniteShares FAANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and GraniteShares FAANG
The main advantage of trading using opposite GraniteShares and GraniteShares FAANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, GraniteShares FAANG 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 FAANG will offset losses from the drop in GraniteShares FAANG's long position.| GraniteShares vs. Leverage Shares 3x | GraniteShares vs. WisdomTree SP 500 | GraniteShares vs. WisdomTree Silver 3x | GraniteShares vs. Leverage Shares 3x |
| GraniteShares FAANG vs. GraniteShares 3x Short | GraniteShares FAANG vs. GraniteShares 3x Long | GraniteShares FAANG vs. GraniteShares 3x Long | GraniteShares FAANG vs. GraniteShares 1x 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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