Correlation Between GraniteShares and Lyxor UCITS

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

Diversification Opportunities for GraniteShares and Lyxor UCITS

-0.28

Correlation Coefficient

GraniteShares  Lyxor UCITS

Very good diversification

The 3 months correlation between GraniteShares and Lyxor is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan 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 Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of GraniteShares i.e., GraniteShares and Lyxor UCITS go up and down completely randomly.

Pair Corralation between GraniteShares and Lyxor UCITS

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 12.29 times more return on investment than Lyxor UCITS. However, GraniteShares is 12.29 times more volatile than Lyxor UCITS Japan. It trades about 0.06 of its potential returns per unit of risk. Lyxor UCITS Japan is currently generating about 0.01 per unit of risk. If you would invest  57,838  in GraniteShares 3x Short on December 4, 2024 and sell it today you would earn a total of  3,750  from holding GraniteShares 3x Short or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

GraniteShares 3x Short  vs.  Lyxor UCITS Japan

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.

Lyxor UCITS Japan

Risk-Adjusted Performance

Very Weak

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

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

The idea behind GraniteShares 3x Short and Lyxor UCITS Japan 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.