Correlation Between GraniteShares and WisdomTree Enhanced

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

Diversification Opportunities for GraniteShares and WisdomTree Enhanced

-0.03

Correlation Coefficient

GraniteShares  WisdomTree Enhanced

Good diversification

The 3 months correlation between GraniteShares and WisdomTree is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and WisdomTree Enhanced Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Enhanced 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 WisdomTree Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Enhanced has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree Enhanced go up and down completely randomly.

Pair Corralation between GraniteShares and WisdomTree Enhanced

Assuming the 90 days trading horizon GraniteShares is expected to generate 2.47 times less return on investment than WisdomTree Enhanced. In addition to that, GraniteShares is 8.92 times more volatile than WisdomTree Enhanced Commodity. It trades about 0.01 of its total potential returns per unit of risk. WisdomTree Enhanced Commodity is currently generating about 0.14 per unit of volatility. If you would invest  100,252  in WisdomTree Enhanced Commodity on October 24, 2024 and sell it today you would earn a total of  7,223  from holding WisdomTree Enhanced Commodity or generate 7.2% return on investment over 90 days.

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

GraniteShares 3x Short  vs.  WisdomTree Enhanced Commodity

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 comparatively stable basic indicators, GraniteShares is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

WisdomTree Enhanced

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Enhanced Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Enhanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GraniteShares and WisdomTree Enhanced

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

The idea behind GraniteShares 3x Short and WisdomTree Enhanced Commodity 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.