Correlation Between GraniteShares Gold and IShares Bloomberg

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

By analyzing existing cross correlation between GraniteShares Gold Trust and iShares Bloomberg Roll, you can compare the effects of market volatilities on GraniteShares Gold and IShares Bloomberg 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 Gold with a short position of IShares Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares Gold and IShares Bloomberg.

Diversification Opportunities for GraniteShares Gold and IShares Bloomberg

0.73

Correlation Coefficient

GraniteShares Gold  IShares Bloomberg

Poor diversification

The 3 months correlation between GraniteShares and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Gold Trust and iShares Bloomberg Roll in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Bloomberg Roll and GraniteShares Gold 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 Gold Trust are associated (or correlated) with IShares Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Bloomberg Roll has no effect on the direction of GraniteShares Gold i.e., GraniteShares Gold and IShares Bloomberg go up and down completely randomly.

Pair Corralation between GraniteShares Gold and IShares Bloomberg

Considering the 90-day investment horizon GraniteShares Gold Trust is expected to generate 1.29 times more return on investment than IShares Bloomberg. However, GraniteShares Gold is 1.29 times more volatile than iShares Bloomberg Roll. It trades about 0.11 of its potential returns per unit of risk. iShares Bloomberg Roll is currently generating about 0.08 per unit of risk. If you would invest  2,460  in GraniteShares Gold Trust on September 2, 2024 and sell it today you would earn a total of  165.00  from holding GraniteShares Gold Trust or generate 6.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GraniteShares Gold Trust  vs.  iShares Bloomberg Roll

GraniteShares Gold Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, GraniteShares Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares Bloomberg Roll

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Bloomberg Roll are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, IShares Bloomberg is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares Gold and IShares Bloomberg

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

The idea behind GraniteShares Gold Trust and iShares Bloomberg Roll 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.