Correlation Between Arrow ETF and GraniteShares HIPS

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

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

Diversification Opportunities for Arrow ETF and GraniteShares HIPS

-0.23

Correlation Coefficient

Arrow ETF  GraniteShares HIPS

Very good diversification

The 3 months correlation between Arrow and GraniteShares is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arrow ETF Trust and GraniteShares HIPS High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares HIPS High and Arrow 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 Arrow ETF Trust are associated (or correlated) with GraniteShares HIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares HIPS High has no effect on the direction of Arrow ETF i.e., Arrow ETF and GraniteShares HIPS go up and down completely randomly.

Pair Corralation between Arrow ETF and GraniteShares HIPS

Given the investment horizon of 90 days Arrow ETF is expected to generate 3.76 times less return on investment than GraniteShares HIPS. In addition to that, Arrow ETF is 1.04 times more volatile than GraniteShares HIPS High. It trades about 0.03 of its total potential returns per unit of risk. GraniteShares HIPS High is currently generating about 0.12 per unit of volatility. If you would invest  1,263  in GraniteShares HIPS High on September 12, 2024 and sell it today you would earn a total of  47.60  from holding GraniteShares HIPS High or generate 3.77% return on investment over 90 days.

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

Arrow ETF Trust  vs.  GraniteShares HIPS High

Arrow ETF Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Arrow ETF is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

GraniteShares HIPS High

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares HIPS High are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GraniteShares HIPS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arrow ETF and GraniteShares HIPS

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

The idea behind Arrow ETF Trust and GraniteShares HIPS High 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.