Correlation Between GraniteShares and JPM BetaBuilders

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

By analyzing existing cross correlation between GraniteShares 3x Long and JPM BetaBuilders Treasury, you can compare the effects of market volatilities on GraniteShares and JPM BetaBuilders 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 JPM BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and JPM BetaBuilders.

Diversification Opportunities for GraniteShares and JPM BetaBuilders

0.76

Correlation Coefficient

GraniteShares  JPM BetaBuilders

Poor diversification

The 3 months correlation between GraniteShares and JPM is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and JPM BetaBuilders Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM BetaBuilders Treasury 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 3x Long are associated (or correlated) with JPM BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM BetaBuilders Treasury has no effect on the direction of GraniteShares i.e., GraniteShares and JPM BetaBuilders go up and down completely randomly.

Pair Corralation between GraniteShares and JPM BetaBuilders

Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 105.07 times more return on investment than JPM BetaBuilders. However, GraniteShares is 105.07 times more volatile than JPM BetaBuilders Treasury. It trades about 0.08 of its potential returns per unit of risk. JPM BetaBuilders Treasury is currently generating about 0.58 per unit of risk. If you would invest  9,176  in GraniteShares 3x Long on October 6, 2024 and sell it today you would earn a total of  373.00  from holding GraniteShares 3x Long or generate 4.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

GraniteShares 3x Long  vs.  JPM BetaBuilders Treasury

GraniteShares 3x Long

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Long are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

JPM BetaBuilders Treasury

Risk-Adjusted Performance

47 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in JPM BetaBuilders Treasury are ranked lower than 47 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, JPM BetaBuilders is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GraniteShares and JPM BetaBuilders

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

The idea behind GraniteShares 3x Long and JPM BetaBuilders Treasury 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.