Correlation Between First Trust and GraniteShares
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Eurozone and GraniteShares 3x Short, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and GraniteShares.
Diversification Opportunities for First Trust and GraniteShares
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and GraniteShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Eurozone and GraniteShares 3x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Short and First Trust 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 First Trust Eurozone 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 Short has no effect on the direction of First Trust i.e., First Trust and GraniteShares go up and down completely randomly.
Pair Corralation between First Trust and GraniteShares
Assuming the 90 days trading horizon First Trust is expected to generate 85.68 times less return on investment than GraniteShares. But when comparing it to its historical volatility, First Trust Eurozone is 81.67 times less risky than GraniteShares. It trades about 0.04 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 15,020 in GraniteShares 3x Short on September 2, 2024 and sell it today you would earn a total of 49,205 from holding GraniteShares 3x Short or generate 327.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
First Trust Eurozone vs. GraniteShares 3x Short
Performance |
| Timeline |
| First Trust Eurozone |
| GraniteShares 3x Short |
First Trust and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and GraniteShares
The main advantage of trading using opposite First Trust and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. GraniteShares 3x Short | First Trust vs. WisdomTree Natural Gas | First Trust vs. Leverage Shares 3x | First Trust vs. WisdomTree Natural Gas |
| GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 1x 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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