Correlation Between GraniteShares and WisdomTree
Can any of the company-specific risk be diversified away by investing in both GraniteShares and WisdomTree 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 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 SP 500, you can compare the effects of market volatilities on GraniteShares and WisdomTree 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and WisdomTree.
Diversification Opportunities for GraniteShares and WisdomTree
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GraniteShares and WisdomTree is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and WisdomTree SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SP 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SP 500 has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree go up and down completely randomly.
Pair Corralation between GraniteShares and WisdomTree
Assuming the 90 days trading horizon GraniteShares 3x Short is expected to under-perform the WisdomTree. In addition to that, GraniteShares is 2.87 times more volatile than WisdomTree SP 500. It trades about -0.16 of its total potential returns per unit of risk. WisdomTree SP 500 is currently generating about -0.09 per unit of volatility. If you would invest 440,900 in WisdomTree SP 500 on August 31, 2024 and sell it today you would lose (312,600) from holding WisdomTree SP 500 or give up 70.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares 3x Short vs. WisdomTree SP 500
Performance |
| Timeline |
| GraniteShares 3x Short |
| WisdomTree SP 500 |
GraniteShares and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and WisdomTree
The main advantage of trading using opposite GraniteShares and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, WisdomTree 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 will offset losses from the drop in WisdomTree's long position.| GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. Leverage Shares 3x | GraniteShares vs. WisdomTree Natural Gas |
| WisdomTree vs. WisdomTree Zinc | WisdomTree vs. WisdomTree Brent Crude | WisdomTree vs. WisdomTree Aluminium 2x | WisdomTree 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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