Correlation Between GraniteShares and First Trust
Can any of the company-specific risk be diversified away by investing in both GraniteShares and First Trust 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 First Trust 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 First Trust Nasdaq, you can compare the effects of market volatilities on GraniteShares and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and First Trust.
Diversification Opportunities for GraniteShares and First Trust
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GraniteShares and First is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of GraniteShares i.e., GraniteShares and First Trust go up and down completely randomly.
Pair Corralation between GraniteShares and First Trust
Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 2.92 times more return on investment than First Trust. However, GraniteShares is 2.92 times more volatile than First Trust Nasdaq. It trades about 0.1 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.17 per unit of risk. If you would invest 1,608 in GraniteShares 3x Short on August 31, 2024 and sell it today you would earn a total of 161.00 from holding GraniteShares 3x Short or generate 10.01% 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. First Trust Nasdaq
Performance |
| Timeline |
| GraniteShares 3x Short |
| First Trust Nasdaq |
GraniteShares and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and First Trust
The main advantage of trading using opposite GraniteShares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. Leverage Shares 3x | GraniteShares vs. WisdomTree Natural Gas |
| First Trust vs. Leverage Shares 3x | First Trust vs. WisdomTree Natural Gas | First Trust vs. GraniteShares 3x Short | First Trust 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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