Correlation Between GraniteShares ETF and First Trust
Can any of the company-specific risk be diversified away by investing in both GraniteShares ETF and First Trust 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 ETF and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GraniteShares ETF Trust and First Trust IndustrialsProducer, you can compare the effects of market volatilities on GraniteShares ETF and First Trust 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 ETF with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and First Trust.
Diversification Opportunities for GraniteShares ETF and First Trust
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GraniteShares and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and First Trust IndustrialsProduce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Industri and GraniteShares ETF 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 ETF Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Industri has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and First Trust go up and down completely randomly.
Pair Corralation between GraniteShares ETF and First Trust
Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 15.17 times more return on investment than First Trust. However, GraniteShares ETF is 15.17 times more volatile than First Trust IndustrialsProducer. It trades about 0.22 of its potential returns per unit of risk. First Trust IndustrialsProducer is currently generating about 0.3 per unit of risk. If you would invest 3,301 in GraniteShares ETF Trust on August 31, 2024 and sell it today you would earn a total of 2,613 from holding GraniteShares ETF Trust or generate 79.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares ETF Trust vs. First Trust IndustrialsProduce
Performance |
| Timeline |
| GraniteShares ETF Trust |
| First Trust Industri |
GraniteShares ETF and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares ETF and First Trust
The main advantage of trading using opposite GraniteShares ETF and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares ETF position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| GraniteShares ETF vs. GraniteShares ETF Trust | GraniteShares ETF vs. Direxion Shares ETF | GraniteShares ETF vs. Direxion Daily AMZN | GraniteShares ETF vs. Direxion Daily GOOGL |
| First Trust vs. Industrial Select Sector | First Trust vs. Driven Brands Holdings | First Trust vs. iShares Aerospace Defense | First Trust vs. Vanguard Industrials Index |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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