Correlation Between IShares II and GraniteShares
Can any of the company-specific risk be diversified away by investing in both IShares II 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 IShares II and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares II Public and GraniteShares 3x Short, you can compare the effects of market volatilities on IShares II 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 IShares II with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares II and GraniteShares.
Diversification Opportunities for IShares II and GraniteShares
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and GraniteShares is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding iShares II Public 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 IShares II 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 II Public 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 IShares II i.e., IShares II and GraniteShares go up and down completely randomly.
Pair Corralation between IShares II and GraniteShares
Assuming the 90 days trading horizon IShares II is expected to generate 14.6 times less return on investment than GraniteShares. But when comparing it to its historical volatility, iShares II Public is 29.59 times less risky than GraniteShares. It trades about 0.06 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 25,685 in GraniteShares 3x Short on September 12, 2024 and sell it today you would earn a total of 38,928 from holding GraniteShares 3x Short or generate 151.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.88% |
| Values | Daily Returns |
iShares II Public vs. GraniteShares 3x Short
Performance |
| Timeline |
| iShares II Public |
| GraniteShares 3x Short |
IShares II and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares II and GraniteShares
The main advantage of trading using opposite IShares II and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares II 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.| IShares II vs. iShares MSCI Japan | IShares II vs. iShares JP Morgan | IShares II vs. iShares MSCI Europe | IShares II vs. iShares Nasdaq Biotechnology |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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