Correlation Between GraniteShares and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both GraniteShares and Leverage Shares 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 Leverage Shares 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 Leverage Shares 3x, you can compare the effects of market volatilities on GraniteShares and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Leverage Shares.
Diversification Opportunities for GraniteShares and Leverage Shares
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GraniteShares and Leverage is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of GraniteShares i.e., GraniteShares and Leverage Shares go up and down completely randomly.
Pair Corralation between GraniteShares and Leverage Shares
Assuming the 90 days trading horizon GraniteShares is expected to generate 3.07 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, GraniteShares 3x Short is 1.5 times less risky than Leverage Shares. It trades about 0.04 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,772 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 858.00 from holding Leverage Shares 3x or generate 17.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares 3x Short vs. Leverage Shares 3x
Performance |
| Timeline |
| GraniteShares 3x Short |
| Leverage Shares 3x |
GraniteShares and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and Leverage Shares
The main advantage of trading using opposite GraniteShares and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 1x Short |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |