Correlation Between GraniteShares ETF and Northern Lights
Can any of the company-specific risk be diversified away by investing in both GraniteShares ETF and Northern Lights 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 Northern Lights 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 Northern Lights, you can compare the effects of market volatilities on GraniteShares ETF and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and Northern Lights.
Diversification Opportunities for GraniteShares ETF and Northern Lights
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GraniteShares and Northern is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and Northern Lights go up and down completely randomly.
Pair Corralation between GraniteShares ETF and Northern Lights
Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 24.59 times more return on investment than Northern Lights. However, GraniteShares ETF is 24.59 times more volatile than Northern Lights. It trades about 0.08 of its potential returns per unit of risk. Northern Lights is currently generating about 0.14 per unit of risk. If you would invest 2,197 in GraniteShares ETF Trust on August 24, 2024 and sell it today you would earn a total of 3,209 from holding GraniteShares ETF Trust or generate 146.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GraniteShares ETF Trust vs. Northern Lights
Performance |
| Timeline |
| GraniteShares ETF Trust |
| Northern Lights |
GraniteShares ETF and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares ETF and Northern Lights
The main advantage of trading using opposite GraniteShares ETF and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares ETF position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' 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 |
| Northern Lights vs. Northern Lights | Northern Lights vs. Northern Lights | Northern Lights vs. ETF Series Solutions | Northern Lights vs. Mairs Power Minnesota |
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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