Correlation Between GraniteShares and LS 1x

Can any of the company-specific risk be diversified away by investing in both GraniteShares and LS 1x 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 LS 1x 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 LS 1x Tesla, you can compare the effects of market volatilities on GraniteShares and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and LS 1x.

Diversification Opportunities for GraniteShares and LS 1x

0.76

Correlation Coefficient

GraniteShares  LS 1x

Poor diversification

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

Pair Corralation between GraniteShares and LS 1x

Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 1.68 times more return on investment than LS 1x. However, GraniteShares is 1.68 times more volatile than LS 1x Tesla. It trades about 0.09 of its potential returns per unit of risk. LS 1x Tesla is currently generating about 0.05 per unit of risk. If you would invest  1,323  in GraniteShares 3x Long on October 22, 2024 and sell it today you would earn a total of  3,908  from holding GraniteShares 3x Long or generate 295.39% return on investment over 90 days.

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

GraniteShares 3x Long  vs.  LS 1x Tesla

GraniteShares 3x Long

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Long are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

LS 1x Tesla

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LS 1x Tesla are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LS 1x unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GraniteShares and LS 1x

The main advantage of trading using opposite GraniteShares and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.

The idea behind GraniteShares 3x Long and LS 1x Tesla 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.