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
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GraniteShares and WisdomTree is -0.21. 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 under-perform the WisdomTree Natural. But the etf apears to be less risky and, when comparing its historical volatility, GraniteShares 3x Short is 3.31 times less risky than WisdomTree Natural. The etf trades about -0.05 of its potential returns per unit of risk. The WisdomTree Natural Gas is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 86,363 in WisdomTree Natural Gas on September 2, 2024 and sell it today you would earn a total of 26,420 from holding WisdomTree Natural Gas or generate 30.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| 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. WisdomTree Natural Gas | GraniteShares vs. Leverage Shares 3x | GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. WisdomTree SP 500 |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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