Correlation Between GraniteShares ETF and Vanguard Short

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

By analyzing existing cross correlation between GraniteShares ETF Trust and Vanguard Short Term Bond, you can compare the effects of market volatilities on GraniteShares ETF and Vanguard Short 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 ETF with a short position of Vanguard Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and Vanguard Short.

Diversification Opportunities for GraniteShares ETF and Vanguard Short

-0.69

Correlation Coefficient

GraniteShares ETF  Vanguard Short

Excellent diversification

The 3 months correlation between GraniteShares and Vanguard is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and Vanguard Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and GraniteShares ETF 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 ETF Trust are associated (or correlated) with Vanguard Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and Vanguard Short go up and down completely randomly.

Pair Corralation between GraniteShares ETF and Vanguard Short

Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 98.25 times more return on investment than Vanguard Short. However, GraniteShares ETF is 98.25 times more volatile than Vanguard Short Term Bond. It trades about 0.15 of its potential returns per unit of risk. Vanguard Short Term Bond is currently generating about 0.01 per unit of risk. If you would invest  2,752  in GraniteShares ETF Trust on August 30, 2024 and sell it today you would earn a total of  3,162  from holding GraniteShares ETF Trust or generate 114.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

GraniteShares ETF Trust  vs.  Vanguard Short Term Bond

GraniteShares ETF Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, GraniteShares ETF disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Short Term

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Vanguard Short Term Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard Short is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GraniteShares ETF and Vanguard Short

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

The idea behind GraniteShares ETF Trust and Vanguard Short Term Bond 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.