Correlation Between WisdomTree Battery and GraniteShares

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

By analyzing existing cross correlation between WisdomTree Battery Solutions and GraniteShares 3x Short, you can compare the effects of market volatilities on WisdomTree Battery 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 WisdomTree Battery with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Battery and GraniteShares.

Diversification Opportunities for WisdomTree Battery and GraniteShares

-0.79

Correlation Coefficient

WisdomTree Battery  GraniteShares

Pay attention - limited upside

The 3 months correlation between WisdomTree and GraniteShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Battery Solutions 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 WisdomTree Battery 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 WisdomTree Battery Solutions 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 WisdomTree Battery i.e., WisdomTree Battery and GraniteShares go up and down completely randomly.

Pair Corralation between WisdomTree Battery and GraniteShares

Assuming the 90 days trading horizon WisdomTree Battery Solutions is expected to under-perform the GraniteShares. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Battery Solutions is 39.03 times less risky than GraniteShares. The etf trades about -0.01 of its potential returns per unit of risk. The GraniteShares 3x Short is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,956,250  in GraniteShares 3x Short on September 5, 2024 and sell it today you would lose (1,893,162) from holding GraniteShares 3x Short or give up 96.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

WisdomTree Battery Solutions  vs.  GraniteShares 3x Short

WisdomTree Battery

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Battery Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, WisdomTree Battery unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with WisdomTree Battery and GraniteShares

The main advantage of trading using opposite WisdomTree Battery and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Battery 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.

The idea behind WisdomTree Battery Solutions and GraniteShares 3x Short 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.