Correlation Between WisdomTree Natural and GraniteShares
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural 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 WisdomTree Natural and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Natural Gas and GraniteShares 3x Short, you can compare the effects of market volatilities on WisdomTree Natural 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 WisdomTree Natural with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and GraniteShares.
Diversification Opportunities for WisdomTree Natural and GraniteShares
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WisdomTree and GraniteShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas 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 WisdomTree Natural 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 WisdomTree Natural Gas 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 WisdomTree Natural i.e., WisdomTree Natural and GraniteShares go up and down completely randomly.
Pair Corralation between WisdomTree Natural and GraniteShares
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the GraniteShares. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Natural Gas is 28.12 times less risky than GraniteShares. The etf trades about -0.1 of its potential returns per unit of risk. The GraniteShares 3x Short is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,803,250 in GraniteShares 3x Short on August 30, 2024 and sell it today you would lose (1,730,175) from holding GraniteShares 3x Short or give up 95.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.59% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. GraniteShares 3x Short
Performance |
| Timeline |
| WisdomTree Natural Gas |
| GraniteShares 3x Short |
WisdomTree Natural and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and GraniteShares
The main advantage of trading using opposite WisdomTree Natural and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural 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.| WisdomTree Natural vs. WisdomTree NASDAQ 100 | WisdomTree Natural vs. WisdomTree SP 500 | WisdomTree Natural vs. WisdomTree Silver 3x | WisdomTree Natural vs. Invesco Technology SP |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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