Correlation Between GraniteShares and Legal General
Can any of the company-specific risk be diversified away by investing in both GraniteShares and Legal General 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 Legal General 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 Legal General UCITS, you can compare the effects of market volatilities on GraniteShares and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Legal General.
Diversification Opportunities for GraniteShares and Legal General
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GraniteShares and Legal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of GraniteShares i.e., GraniteShares and Legal General go up and down completely randomly.
Pair Corralation between GraniteShares and Legal General
Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 3.26 times more return on investment than Legal General. However, GraniteShares is 3.26 times more volatile than Legal General UCITS. It trades about 0.13 of its potential returns per unit of risk. Legal General UCITS is currently generating about 0.07 per unit of risk. If you would invest 63,050 in GraniteShares 3x Short on August 30, 2024 and sell it today you would earn a total of 10,025 from holding GraniteShares 3x Short or generate 15.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GraniteShares 3x Short vs. Legal General UCITS
Performance |
| Timeline |
| GraniteShares 3x Short |
| Legal General UCITS |
GraniteShares and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and Legal General
The main advantage of trading using opposite GraniteShares and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 1x Short |
| Legal General vs. GraniteShares 3x Short | Legal General vs. WisdomTree Natural Gas | Legal General vs. Leverage Shares 3x | Legal General vs. WisdomTree Natural Gas |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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