Correlation Between GraniteShares ETF and Invesco Agriculture

Can any of the company-specific risk be diversified away by investing in both GraniteShares ETF and Invesco Agriculture 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 ETF and Invesco Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares ETF Trust and Invesco Agriculture Commodity, you can compare the effects of market volatilities on GraniteShares ETF and Invesco Agriculture 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 ETF with a short position of Invesco Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares ETF and Invesco Agriculture.

Diversification Opportunities for GraniteShares ETF and Invesco Agriculture

0.78

Correlation Coefficient

GraniteShares ETF  Invesco Agriculture

Poor diversification

The 3 months correlation between GraniteShares and Invesco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares ETF Trust and Invesco Agriculture Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Agriculture and GraniteShares ETF 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 ETF Trust are associated (or correlated) with Invesco Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Agriculture has no effect on the direction of GraniteShares ETF i.e., GraniteShares ETF and Invesco Agriculture go up and down completely randomly.

Pair Corralation between GraniteShares ETF and Invesco Agriculture

Given the investment horizon of 90 days GraniteShares ETF Trust is expected to generate 2.76 times more return on investment than Invesco Agriculture. However, GraniteShares ETF is 2.76 times more volatile than Invesco Agriculture Commodity. It trades about 0.11 of its potential returns per unit of risk. Invesco Agriculture Commodity is currently generating about 0.11 per unit of risk. If you would invest  2,482  in GraniteShares ETF Trust on September 22, 2024 and sell it today you would earn a total of  894.00  from holding GraniteShares ETF Trust or generate 36.02% return on investment over 90 days.

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

GraniteShares ETF Trust  vs.  Invesco Agriculture Commodity

GraniteShares ETF Trust

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, GraniteShares ETF sustained solid returns over the last few months and may actually be approaching a breakup point.

Invesco Agriculture

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Agriculture Commodity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Invesco Agriculture is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares ETF and Invesco Agriculture

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

The idea behind GraniteShares ETF Trust and Invesco Agriculture 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.