Correlation Between GraniteShares Bloomberg and IShares Commodity

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

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

Diversification Opportunities for GraniteShares Bloomberg and IShares Commodity

0.91

Correlation Coefficient

GraniteShares Bloomberg  IShares Commodity

Almost no diversification

The 3 months correlation between GraniteShares and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Bloomberg Commod and iShares Commodity Curve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Commodity Curve and GraniteShares Bloomberg 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 Bloomberg Commodity are associated (or correlated) with IShares Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Commodity Curve has no effect on the direction of GraniteShares Bloomberg i.e., GraniteShares Bloomberg and IShares Commodity go up and down completely randomly.

Pair Corralation between GraniteShares Bloomberg and IShares Commodity

Given the investment horizon of 90 days GraniteShares Bloomberg Commodity is expected to generate 1.3 times more return on investment than IShares Commodity. However, GraniteShares Bloomberg is 1.3 times more volatile than iShares Commodity Curve. It trades about 0.16 of its potential returns per unit of risk. iShares Commodity Curve is currently generating about 0.04 per unit of risk. If you would invest  1,953  in GraniteShares Bloomberg Commodity on December 2, 2024 and sell it today you would earn a total of  139.00  from holding GraniteShares Bloomberg Commodity or generate 7.12% return on investment over 90 days.

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

GraniteShares Bloomberg Commod  vs.  iShares Commodity Curve

GraniteShares Bloomberg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Bloomberg Commodity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent primary indicators, GraniteShares Bloomberg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares Commodity Curve

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Commodity Curve are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Commodity is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GraniteShares Bloomberg and IShares Commodity

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

The idea behind GraniteShares Bloomberg Commodity and iShares Commodity Curve 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.