Correlation Between GraniteShares and Invesco SP
Can any of the company-specific risk be diversified away by investing in both GraniteShares and Invesco SP 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 Invesco SP 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 Invesco SP 500, you can compare the effects of market volatilities on GraniteShares and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Invesco SP.
Diversification Opportunities for GraniteShares and Invesco SP
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between GraniteShares and Invesco is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of GraniteShares i.e., GraniteShares and Invesco SP go up and down completely randomly.
Pair Corralation between GraniteShares and Invesco SP
Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 21.1 times more return on investment than Invesco SP. However, GraniteShares is 21.1 times more volatile than Invesco SP 500. It trades about 0.05 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.08 per unit of risk. If you would invest 63,238 in GraniteShares 3x Short on November 30, 2024 and sell it today you would lose (3,325) from holding GraniteShares 3x Short or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares 3x Short vs. Invesco SP 500
Performance |
| Timeline |
| GraniteShares 3x Short |
| Invesco SP 500 |
GraniteShares and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and Invesco SP
The main advantage of trading using opposite GraniteShares and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP's long position.| GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Short |
| Invesco SP vs. Invesco MSCI Emerging | Invesco SP vs. Invesco EURO STOXX | Invesco SP vs. Invesco Markets Plc | Invesco SP vs. Invesco FTSE RAFI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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