Correlation Between GraniteShares and SPDR SP

Can any of the company-specific risk be diversified away by investing in both GraniteShares and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 3x Short and SPDR SP Materials, you can compare the effects of market volatilities on GraniteShares and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and SPDR SP.

Diversification Opportunities for GraniteShares and SPDR SP

-0.41

Correlation Coefficient

GraniteShares  SPDR SP

Very good diversification

The 3 months correlation between GraniteShares and SPDR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and SPDR SP Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Materials 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 3x Short are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Materials has no effect on the direction of GraniteShares i.e., GraniteShares and SPDR SP go up and down completely randomly.

Pair Corralation between GraniteShares and SPDR SP

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to under-perform the SPDR SP. In addition to that, GraniteShares is 9.02 times more volatile than SPDR SP Materials. It trades about -0.15 of its total potential returns per unit of risk. SPDR SP Materials is currently generating about 0.05 per unit of volatility. If you would invest  4,488  in SPDR SP Materials on September 4, 2024 and sell it today you would earn a total of  104.00  from holding SPDR SP Materials or generate 2.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

GraniteShares 3x Short  vs.  SPDR SP Materials

GraniteShares 3x Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GraniteShares 3x Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

SPDR SP Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GraniteShares and SPDR SP

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

The idea behind GraniteShares 3x Short and SPDR SP Materials 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.