Correlation Between Alphabet and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and GraniteShares 3x Long, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and GraniteShares.
Diversification Opportunities for Alphabet and GraniteShares
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alphabet and GraniteShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and GraniteShares go up and down completely randomly.
Pair Corralation between Alphabet and GraniteShares
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the GraniteShares. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class C is 2.39 times less risky than GraniteShares. The stock trades about -0.02 of its potential returns per unit of risk. The GraniteShares 3x Long is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 8,586 in GraniteShares 3x Long on September 1, 2024 and sell it today you would earn a total of 2,157 from holding GraniteShares 3x Long or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Alphabet Inc Class C vs. GraniteShares 3x Long
Performance |
| Timeline |
| Alphabet Class C |
| GraniteShares 3x Long |
Alphabet and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and GraniteShares
The main advantage of trading using opposite Alphabet and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.The idea behind Alphabet Inc Class C and GraniteShares 3x Long 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.| GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. Leverage Shares 3x | GraniteShares vs. WisdomTree Natural Gas | GraniteShares vs. WisdomTree SP 500 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |