Correlation Between GraniteShares and Xtrackers Russell

Can any of the company-specific risk be diversified away by investing in both GraniteShares and Xtrackers Russell 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 Xtrackers Russell 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 Xtrackers Russell 2000, you can compare the effects of market volatilities on GraniteShares and Xtrackers Russell 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 Xtrackers Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and Xtrackers Russell.

Diversification Opportunities for GraniteShares and Xtrackers Russell

-0.28

Correlation Coefficient

GraniteShares  Xtrackers Russell

Very good diversification

The 3 months correlation between GraniteShares and Xtrackers is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and Xtrackers Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Russell 2000 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 Xtrackers Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Russell 2000 has no effect on the direction of GraniteShares i.e., GraniteShares and Xtrackers Russell go up and down completely randomly.

Pair Corralation between GraniteShares and Xtrackers Russell

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to under-perform the Xtrackers Russell. In addition to that, GraniteShares is 8.44 times more volatile than Xtrackers Russell 2000. It trades about -0.04 of its total potential returns per unit of risk. Xtrackers Russell 2000 is currently generating about -0.21 per unit of volatility. If you would invest  2,758,050  in Xtrackers Russell 2000 on October 10, 2024 and sell it today you would lose (120,050) from holding Xtrackers Russell 2000 or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

GraniteShares 3x Short  vs.  Xtrackers Russell 2000

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Xtrackers Russell 2000

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Russell 2000 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Xtrackers Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GraniteShares and Xtrackers Russell

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

The idea behind GraniteShares 3x Short and Xtrackers Russell 2000 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.