Correlation Between GraniteShares and WisdomTree Natural
Can any of the company-specific risk be diversified away by investing in both GraniteShares and WisdomTree Natural 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 Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GraniteShares 3x Short and WisdomTree Natural Gas, you can compare the effects of market volatilities on GraniteShares and WisdomTree Natural 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 Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and WisdomTree Natural.
Diversification Opportunities for GraniteShares and WisdomTree Natural
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GraniteShares and WisdomTree is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas 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 Short are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree Natural go up and down completely randomly.
Pair Corralation between GraniteShares and WisdomTree Natural
Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 4.6 times more return on investment than WisdomTree Natural. However, GraniteShares is 4.6 times more volatile than WisdomTree Natural Gas. It trades about 0.03 of its potential returns per unit of risk. WisdomTree Natural Gas is currently generating about 0.01 per unit of risk. If you would invest 9,940 in GraniteShares 3x Short on November 28, 2024 and sell it today you would lose (7,923) from holding GraniteShares 3x Short or give up 79.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares 3x Short vs. WisdomTree Natural Gas
Performance |
| Timeline |
| GraniteShares 3x Short |
| WisdomTree Natural Gas |
GraniteShares and WisdomTree Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and WisdomTree Natural
The main advantage of trading using opposite GraniteShares and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, WisdomTree Natural 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 Natural will offset losses from the drop in WisdomTree Natural's long position.| GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Short |
| WisdomTree Natural vs. WisdomTree Zinc | WisdomTree Natural vs. WisdomTree Brent Crude | WisdomTree Natural vs. WisdomTree Aluminium 2x | WisdomTree Natural vs. WisdomTree Enhanced Commodity |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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