Correlation Between IShares GSCI and GraniteShares Bloomberg

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

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

Diversification Opportunities for IShares GSCI and GraniteShares Bloomberg

0.89

Correlation Coefficient

IShares GSCI  GraniteShares Bloomberg

Very poor diversification

The 3 months correlation between IShares and GraniteShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares GSCI Commodity and GraniteShares Bloomberg Commod in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares Bloomberg and IShares GSCI 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 iShares GSCI Commodity are associated (or correlated) with GraniteShares Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares Bloomberg has no effect on the direction of IShares GSCI i.e., IShares GSCI and GraniteShares Bloomberg go up and down completely randomly.

Pair Corralation between IShares GSCI and GraniteShares Bloomberg

Given the investment horizon of 90 days IShares GSCI is expected to generate 8.13 times less return on investment than GraniteShares Bloomberg. In addition to that, IShares GSCI is 1.44 times more volatile than GraniteShares Bloomberg Commodity. It trades about 0.01 of its total potential returns per unit of risk. GraniteShares Bloomberg Commodity is currently generating about 0.06 per unit of volatility. If you would invest  1,958  in GraniteShares Bloomberg Commodity on August 30, 2024 and sell it today you would earn a total of  58.00  from holding GraniteShares Bloomberg Commodity or generate 2.96% return on investment over 90 days.

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

iShares GSCI Commodity  vs.  GraniteShares Bloomberg Commod

iShares GSCI Commodity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares GSCI Commodity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, IShares GSCI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GraniteShares Bloomberg

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Bloomberg Commodity are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, GraniteShares Bloomberg is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares GSCI and GraniteShares Bloomberg

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

The idea behind iShares GSCI Commodity and GraniteShares Bloomberg Commodity 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.