Correlation Between GraniteShares and Leverage Shares

Can any of the company-specific risk be diversified away by investing in both GraniteShares and Leverage Shares 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 Leverage Shares 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 Leverage Shares 2x, you can compare the effects of market volatilities on GraniteShares and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Leverage Shares.

Diversification Opportunities for GraniteShares and Leverage Shares

-0.11

Correlation Coefficient

GraniteShares  Leverage Shares

Good diversification

The 3 months correlation between GraniteShares and Leverage is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Leverage Shares 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 2x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 2x has no effect on the direction of GraniteShares i.e., GraniteShares and Leverage Shares go up and down completely randomly.

Pair Corralation between GraniteShares and Leverage Shares

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 2.31 times more return on investment than Leverage Shares. However, GraniteShares is 2.31 times more volatile than Leverage Shares 2x. It trades about 0.05 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about -0.11 per unit of risk. If you would invest  63,238  in GraniteShares 3x Short on December 28, 2024 and sell it today you would lose (850.00) from holding GraniteShares 3x Short or give up 1.34% of portfolio value over 90 days.

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

GraniteShares 3x Short  vs.  Leverage Shares 2x

GraniteShares 3x Short

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Short are ranked lower than 4 (%) 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.

Leverage Shares 2x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leverage Shares 2x 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with GraniteShares and Leverage Shares

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

The idea behind GraniteShares 3x Short and Leverage Shares 2x 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.