Correlation Between Xtrackers USD and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Xtrackers USD 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 Xtrackers USD and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers USD Corporate and GraniteShares 3x Short, you can compare the effects of market volatilities on Xtrackers USD 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 Xtrackers USD with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers USD and GraniteShares.
Diversification Opportunities for Xtrackers USD and GraniteShares
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and GraniteShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD Corporate 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 Xtrackers USD 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 Xtrackers USD Corporate 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 Xtrackers USD i.e., Xtrackers USD and GraniteShares go up and down completely randomly.
Pair Corralation between Xtrackers USD and GraniteShares
Assuming the 90 days trading horizon Xtrackers USD Corporate is expected to generate 0.06 times more return on investment than GraniteShares. However, Xtrackers USD Corporate is 17.89 times less risky than GraniteShares. It trades about 0.07 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about -0.03 per unit of risk. If you would invest 1,992 in Xtrackers USD Corporate on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Xtrackers USD Corporate or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers USD Corporate vs. GraniteShares 3x Short
Performance |
| Timeline |
| Xtrackers USD Corporate |
| GraniteShares 3x Short |
Xtrackers USD and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers USD and GraniteShares
The main advantage of trading using opposite Xtrackers USD and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD 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.| Xtrackers USD vs. GraniteShares 3x Short | Xtrackers USD vs. WisdomTree Natural Gas | Xtrackers USD vs. Leverage Shares 3x | Xtrackers USD vs. WisdomTree Natural Gas |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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