Correlation Between GraniteShares and Freedom Day
Can any of the company-specific risk be diversified away by investing in both GraniteShares and Freedom Day 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 GraniteShares and Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GraniteShares 2x Long and Freedom Day Dividend, you can compare the effects of market volatilities on GraniteShares and Freedom Day 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 GraniteShares with a short position of Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Freedom Day.
Diversification Opportunities for GraniteShares and Freedom Day
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GraniteShares and Freedom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 2x Long and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and GraniteShares 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 GraniteShares 2x Long are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of GraniteShares i.e., GraniteShares and Freedom Day go up and down completely randomly.
Pair Corralation between GraniteShares and Freedom Day
Given the investment horizon of 90 days GraniteShares 2x Long is expected to under-perform the Freedom Day. In addition to that, GraniteShares is 8.74 times more volatile than Freedom Day Dividend. It trades about -0.22 of its total potential returns per unit of risk. Freedom Day Dividend is currently generating about -0.03 per unit of volatility. If you would invest 3,440 in Freedom Day Dividend on September 13, 2024 and sell it today you would lose (14.00) from holding Freedom Day Dividend or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GraniteShares 2x Long vs. Freedom Day Dividend
Performance |
| Timeline |
| GraniteShares 2x Long |
| Freedom Day Dividend |
GraniteShares and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GraniteShares and Freedom Day
The main advantage of trading using opposite GraniteShares and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| GraniteShares vs. ProShares Ultra SP500 | GraniteShares vs. Direxion Daily SP500 | GraniteShares vs. Direxion Daily SP | GraniteShares vs. Direxion Daily SP |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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