Correlation Between GraniteShares 15x and Simplify Exchange

Can any of the company-specific risk be diversified away by investing in both GraniteShares 15x and Simplify Exchange 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 15x and Simplify Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 15x Long and Simplify Exchange Traded, you can compare the effects of market volatilities on GraniteShares 15x and Simplify Exchange 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 15x with a short position of Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 15x and Simplify Exchange.

Diversification Opportunities for GraniteShares 15x and Simplify Exchange

-0.91

Correlation Coefficient

GraniteShares 15x  Simplify Exchange

Pay attention - limited upside

The 3 months correlation between GraniteShares and Simplify is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 15x Long and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded and GraniteShares 15x 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 15x Long are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of GraniteShares 15x i.e., GraniteShares 15x and Simplify Exchange go up and down completely randomly.

Pair Corralation between GraniteShares 15x and Simplify Exchange

Given the investment horizon of 90 days GraniteShares 15x Long is expected to generate 5.62 times more return on investment than Simplify Exchange. However, GraniteShares 15x is 5.62 times more volatile than Simplify Exchange Traded. It trades about 0.07 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.09 per unit of risk. If you would invest  5,839  in GraniteShares 15x Long on August 30, 2024 and sell it today you would earn a total of  1,059  from holding GraniteShares 15x Long or generate 18.14% return on investment over 90 days.

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

GraniteShares 15x Long  vs.  Simplify Exchange Traded

GraniteShares 15x Long

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 15x Long are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, GraniteShares 15x disclosed solid returns over the last few months and may actually be approaching a breakup point.

Simplify Exchange Traded

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Exchange is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares 15x and Simplify Exchange

The main advantage of trading using opposite GraniteShares 15x and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 15x position performs unexpectedly, Simplify Exchange 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 Simplify Exchange will offset losses from the drop in Simplify Exchange's long position.

The idea behind GraniteShares 15x Long and Simplify Exchange Traded 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.