Correlation Between GraniteShares and IShares Treasury

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

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

Diversification Opportunities for GraniteShares and IShares Treasury

-0.41

Correlation Coefficient

GraniteShares  IShares Treasury

Very good diversification

The 3 months correlation between GraniteShares and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Bond 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 Short are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of GraniteShares i.e., GraniteShares and IShares Treasury go up and down completely randomly.

Pair Corralation between GraniteShares and IShares Treasury

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to under-perform the IShares Treasury. In addition to that, GraniteShares is 4.73 times more volatile than iShares Treasury Bond. It trades about -0.05 of its total potential returns per unit of risk. iShares Treasury Bond is currently generating about -0.11 per unit of volatility. If you would invest  496.00  in iShares Treasury Bond on September 12, 2024 and sell it today you would lose (31.00) from holding iShares Treasury Bond or give up 6.25% of portfolio value over 90 days.

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

GraniteShares 3x Short  vs.  iShares Treasury Bond

GraniteShares 3x Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GraniteShares 3x Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

iShares Treasury Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Treasury Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Treasury 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 IShares Treasury

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

The idea behind GraniteShares 3x Short and iShares Treasury Bond 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.