Correlation Between WisdomTree and GraniteShares
Can any of the company-specific risk be diversified away by investing in both WisdomTree and GraniteShares 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 WisdomTree and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SP 500 and GraniteShares 3x Long, you can compare the effects of market volatilities on WisdomTree and GraniteShares 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 WisdomTree with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and GraniteShares.
Diversification Opportunities for WisdomTree and GraniteShares
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WisdomTree and GraniteShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SP 500 and GraniteShares 3x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Long and WisdomTree 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 WisdomTree SP 500 are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Long has no effect on the direction of WisdomTree i.e., WisdomTree and GraniteShares go up and down completely randomly.
Pair Corralation between WisdomTree and GraniteShares
Assuming the 90 days trading horizon WisdomTree SP 500 is expected to under-perform the GraniteShares. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree SP 500 is 1.56 times less risky than GraniteShares. The etf trades about -0.08 of its potential returns per unit of risk. The GraniteShares 3x Long is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,701 in GraniteShares 3x Long on August 27, 2024 and sell it today you would earn a total of 3,037 from holding GraniteShares 3x Long or generate 64.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SP 500 vs. GraniteShares 3x Long
Performance |
| Timeline |
| WisdomTree SP 500 |
| GraniteShares 3x Long |
WisdomTree and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and GraniteShares
The main advantage of trading using opposite WisdomTree and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree position performs unexpectedly, GraniteShares 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 GraniteShares will offset losses from the drop in GraniteShares' long position.| WisdomTree vs. WisdomTree Zinc | WisdomTree vs. WisdomTree Brent Crude | WisdomTree vs. WisdomTree Aluminium 2x | WisdomTree vs. WisdomTree Enhanced Commodity |
| GraniteShares vs. WisdomTree SP 500 | GraniteShares vs. WisdomTree Silver 3x | GraniteShares vs. Lyxor 10Y Inflation | GraniteShares vs. GraniteShares 3x Short |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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