Correlation Between GraniteShares ETF and T Rex

Can any of the company-specific risk be diversified away by investing in both GraniteShares ETF and T Rex 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 T Rex 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 T Rex 2X Long, you can compare the effects of market volatilities on GraniteShares ETF and T Rex 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 T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and T Rex.

Diversification Opportunities for GraniteShares ETF and T Rex

0.7

Correlation Coefficient

GraniteShares ETF  T Rex

Poor diversification

The 3 months correlation between GraniteShares and NVDX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and T Rex 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X 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 T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and T Rex go up and down completely randomly.

Pair Corralation between GraniteShares ETF and T Rex

Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 2.62 times more return on investment than T Rex. However, GraniteShares ETF is 2.62 times more volatile than T Rex 2X Long. It trades about 0.16 of its potential returns per unit of risk. T Rex 2X Long is currently generating about 0.15 per unit of risk. If you would invest  2,334  in GraniteShares ETF Trust on September 2, 2024 and sell it today you would earn a total of  3,004  from holding GraniteShares ETF Trust or generate 128.71% return on investment over 90 days.

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

GraniteShares ETF Trust  vs.  T Rex 2X Long

GraniteShares ETF Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 12 (%) 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.

T Rex 2X

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rex 2X Long are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, T Rex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GraniteShares ETF and T Rex

The main advantage of trading using opposite GraniteShares ETF and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares ETF position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.

The idea behind GraniteShares ETF Trust and T Rex 2X Long 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.