Correlation Between Granite 3x and DBT SA
Can any of the company-specific risk be diversified away by investing in both Granite 3x and DBT SA 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 Granite 3x and DBT SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite 3x LVMH and DBT SA, you can compare the effects of market volatilities on Granite 3x and DBT SA 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 Granite 3x with a short position of DBT SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite 3x and DBT SA.
Diversification Opportunities for Granite 3x and DBT SA
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and DBT is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Granite 3x LVMH and DBT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBT SA and Granite 3x 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 Granite 3x LVMH are associated (or correlated) with DBT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBT SA has no effect on the direction of Granite 3x i.e., Granite 3x and DBT SA go up and down completely randomly.
Pair Corralation between Granite 3x and DBT SA
Assuming the 90 days trading horizon Granite 3x LVMH is expected to under-perform the DBT SA. But the etf apears to be less risky and, when comparing its historical volatility, Granite 3x LVMH is 2.11 times less risky than DBT SA. The etf trades about -0.07 of its potential returns per unit of risk. The DBT SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 460.00 in DBT SA on September 12, 2024 and sell it today you would lose (417.00) from holding DBT SA or give up 90.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.63% |
| Values | Daily Returns |
Granite 3x LVMH vs. DBT SA
Performance |
| Timeline |
| Granite 3x LVMH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DBT SA |
Granite 3x and DBT SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite 3x and DBT SA
The main advantage of trading using opposite Granite 3x and DBT SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite 3x position performs unexpectedly, DBT SA 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 DBT SA will offset losses from the drop in DBT SA's long position.The idea behind Granite 3x LVMH and DBT SA 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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