Correlation Between GraniteShares and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both GraniteShares and SPDR Dow 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 SPDR Dow 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 SPDR Dow Jones, you can compare the effects of market volatilities on GraniteShares and SPDR Dow 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 SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and SPDR Dow.
Diversification Opportunities for GraniteShares and SPDR Dow
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GraniteShares and SPDR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of GraniteShares i.e., GraniteShares and SPDR Dow go up and down completely randomly.
Pair Corralation between GraniteShares and SPDR Dow
Assuming the 90 days trading horizon GraniteShares 3x Short is expected to under-perform the SPDR Dow. In addition to that, GraniteShares is 10.18 times more volatile than SPDR Dow Jones. It trades about -0.18 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about -0.07 per unit of volatility. If you would invest 3,606 in SPDR Dow Jones on September 10, 2024 and sell it today you would lose (118.00) from holding SPDR Dow Jones or give up 3.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
GraniteShares 3x Short vs. SPDR Dow Jones
Performance |
Timeline |
GraniteShares 3x Short |
SPDR Dow Jones |
GraniteShares and SPDR Dow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GraniteShares and SPDR Dow
The main advantage of trading using opposite GraniteShares and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.GraniteShares vs. GraniteShares 3x Short | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 3x Long | GraniteShares vs. GraniteShares 1x Short |
SPDR Dow vs. Leverage Shares 3x | SPDR Dow vs. WisdomTree Natural Gas | SPDR Dow vs. GraniteShares 3x Short | SPDR Dow vs. WisdomTree Natural Gas |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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