Correlation Between Scottish Mortgage and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage 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 Scottish Mortgage and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scottish Mortgage Investment and GraniteShares 3x Short, you can compare the effects of market volatilities on Scottish Mortgage 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 Scottish Mortgage with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and GraniteShares.
Diversification Opportunities for Scottish Mortgage and GraniteShares
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scottish and GraniteShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment 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 Scottish Mortgage 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 Scottish Mortgage Investment 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 Scottish Mortgage i.e., Scottish Mortgage and GraniteShares go up and down completely randomly.
Pair Corralation between Scottish Mortgage and GraniteShares
Assuming the 90 days trading horizon Scottish Mortgage is expected to generate 48.54 times less return on investment than GraniteShares. But when comparing it to its historical volatility, Scottish Mortgage Investment is 36.9 times less risky than GraniteShares. It trades about 0.03 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 97.00 in GraniteShares 3x Short on August 27, 2024 and sell it today you would earn a total of 571.00 from holding GraniteShares 3x Short or generate 588.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 74.89% |
| Values | Daily Returns |
Scottish Mortgage Investment vs. GraniteShares 3x Short
Performance |
| Timeline |
| Scottish Mortgage |
| GraniteShares 3x Short |
Scottish Mortgage and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scottish Mortgage and GraniteShares
The main advantage of trading using opposite Scottish Mortgage and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage 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 Scottish Mortgage Investment and GraniteShares 3x Short 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 SP 500 | GraniteShares vs. WisdomTree Silver 3x | GraniteShares vs. Lyxor 10Y Inflation | GraniteShares vs. GraniteShares 3x Long |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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