Correlation Between GraniteShares and Freedom Day

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

By analyzing existing cross correlation between GraniteShares 2x Long and Freedom Day Dividend, you can compare the effects of market volatilities on GraniteShares and Freedom Day 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 with a short position of Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Freedom Day.

Diversification Opportunities for GraniteShares and Freedom Day

-0.02

Correlation Coefficient

GraniteShares  Freedom Day

Good diversification

The 3 months correlation between GraniteShares and Freedom is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 2x Long and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and GraniteShares 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 2x Long are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of GraniteShares i.e., GraniteShares and Freedom Day go up and down completely randomly.

Pair Corralation between GraniteShares and Freedom Day

Given the investment horizon of 90 days GraniteShares 2x Long is expected to generate 3.54 times more return on investment than Freedom Day. However, GraniteShares is 3.54 times more volatile than Freedom Day Dividend. It trades about 0.03 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.05 per unit of risk. If you would invest  2,510  in GraniteShares 2x Long on September 13, 2024 and sell it today you would earn a total of  83.00  from holding GraniteShares 2x Long or generate 3.31% return on investment over 90 days.

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

GraniteShares 2x Long  vs.  Freedom Day Dividend

GraniteShares 2x Long

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 2x Long are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, GraniteShares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Freedom Day Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Day Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares and Freedom Day

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

The idea behind GraniteShares 2x Long and Freedom Day Dividend 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.