Correlation Between Leverage Shares and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Leverage Shares 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 Leverage Shares and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 3x and GraniteShares 3x Long, you can compare the effects of market volatilities on Leverage Shares 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 Leverage Shares with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and GraniteShares.
Diversification Opportunities for Leverage Shares and GraniteShares
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leverage and GraniteShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x 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 Leverage Shares 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 Leverage Shares 3x 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 Leverage Shares i.e., Leverage Shares and GraniteShares go up and down completely randomly.
Pair Corralation between Leverage Shares and GraniteShares
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 2.18 times more return on investment than GraniteShares. However, Leverage Shares is 2.18 times more volatile than GraniteShares 3x Long. It trades about 0.29 of its potential returns per unit of risk. GraniteShares 3x Long is currently generating about 0.12 per unit of risk. If you would invest 538,435 in Leverage Shares 3x on September 2, 2024 and sell it today you would earn a total of 3,213,640 from holding Leverage Shares 3x or generate 596.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. GraniteShares 3x Long
Performance |
| Timeline |
| Leverage Shares 3x |
| GraniteShares 3x Long |
Leverage Shares and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and GraniteShares
The main advantage of trading using opposite Leverage Shares and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares 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.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x |
| GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. Leverage Shares 3x | GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. WisdomTree SP 500 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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