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 5x, 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
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GraniteShares and Leverage is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Leverage Shares 5x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 5x 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 5x 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 3x Short is expected to under-perform the Leverage Shares. In addition to that, GraniteShares is 1.35 times more volatile than Leverage Shares 5x. It trades about -0.05 of its total potential returns per unit of risk. Leverage Shares 5x is currently generating about 0.08 per unit of volatility. If you would invest 164.00 in Leverage Shares 5x on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Leverage Shares 5x or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares 3x Short vs. Leverage Shares 5x
Performance |
| Timeline |
| GraniteShares 3x Short |
| Leverage Shares 5x |
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. WisdomTree SP 500 | GraniteShares vs. WisdomTree Silver 3x | GraniteShares vs. Lyxor 10Y Inflation | GraniteShares vs. GraniteShares 3x Long |
| Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Lyxor 10Y Inflation | Leverage Shares vs. GraniteShares 3x Long |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |