Correlation Between IShares GSCI and GraniteShares Bloomberg
Can any of the company-specific risk be diversified away by investing in both IShares GSCI and GraniteShares Bloomberg 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 IShares GSCI and GraniteShares Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares GSCI Commodity and GraniteShares Bloomberg Commodity, you can compare the effects of market volatilities on IShares GSCI and GraniteShares Bloomberg 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 IShares GSCI with a short position of GraniteShares Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares GSCI and GraniteShares Bloomberg.
Diversification Opportunities for IShares GSCI and GraniteShares Bloomberg
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and GraniteShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares GSCI Commodity and GraniteShares Bloomberg Commod in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares Bloomberg and IShares GSCI 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 iShares GSCI Commodity are associated (or correlated) with GraniteShares Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares Bloomberg has no effect on the direction of IShares GSCI i.e., IShares GSCI and GraniteShares Bloomberg go up and down completely randomly.
Pair Corralation between IShares GSCI and GraniteShares Bloomberg
Given the investment horizon of 90 days iShares GSCI Commodity is expected to generate 1.33 times more return on investment than GraniteShares Bloomberg. However, IShares GSCI is 1.33 times more volatile than GraniteShares Bloomberg Commodity. It trades about 0.06 of its potential returns per unit of risk. GraniteShares Bloomberg Commodity is currently generating about 0.02 per unit of risk. If you would invest 2,577 in iShares GSCI Commodity on August 27, 2024 and sell it today you would earn a total of 33.00 from holding iShares GSCI Commodity or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares GSCI Commodity vs. GraniteShares Bloomberg Commod
Performance |
| Timeline |
| iShares GSCI Commodity |
| GraniteShares Bloomberg |
IShares GSCI and GraniteShares Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares GSCI and GraniteShares Bloomberg
The main advantage of trading using opposite IShares GSCI and GraniteShares Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares GSCI position performs unexpectedly, GraniteShares Bloomberg 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 Bloomberg will offset losses from the drop in GraniteShares Bloomberg's long position.The idea behind iShares GSCI Commodity and GraniteShares Bloomberg Commodity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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