Correlation Between Granite 3x and Gold Bullion

Can any of the company-specific risk be diversified away by investing in both Granite 3x and Gold Bullion 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 Granite 3x and Gold Bullion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Granite 3x LVMH and Gold Bullion Securities, you can compare the effects of market volatilities on Granite 3x and Gold Bullion 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 Granite 3x with a short position of Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite 3x and Gold Bullion.

Diversification Opportunities for Granite 3x and Gold Bullion

-0.64

Correlation Coefficient

Granite 3x  Gold Bullion

Excellent diversification

The 3 months correlation between Granite and Gold is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Granite 3x LVMH and Gold Bullion Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion Securities and Granite 3x 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 Granite 3x LVMH are associated (or correlated) with Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion Securities has no effect on the direction of Granite 3x i.e., Granite 3x and Gold Bullion go up and down completely randomly.

Pair Corralation between Granite 3x and Gold Bullion

Assuming the 90 days trading horizon Granite 3x LVMH is expected to under-perform the Gold Bullion. In addition to that, Granite 3x is 8.54 times more volatile than Gold Bullion Securities. It trades about -0.06 of its total potential returns per unit of risk. Gold Bullion Securities is currently generating about 0.2 per unit of volatility. If you would invest  20,720  in Gold Bullion Securities on September 4, 2024 and sell it today you would earn a total of  2,436  from holding Gold Bullion Securities or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	84.62%
Values	Daily Returns

Granite 3x LVMH  vs.  Gold Bullion Securities

Granite 3x LVMH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite 3x LVMH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Gold Bullion Securities

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bullion Securities are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bullion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Granite 3x and Gold Bullion

The main advantage of trading using opposite Granite 3x and Gold Bullion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite 3x position performs unexpectedly, Gold Bullion 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 Gold Bullion will offset losses from the drop in Gold Bullion's long position.

The idea behind Granite 3x LVMH and Gold Bullion Securities 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.

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.