Correlation Between IShares Core and GraniteShares

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

By analyzing existing cross correlation between iShares Core SP and GraniteShares 1x Short, you can compare the effects of market volatilities on IShares Core and GraniteShares 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 IShares Core with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and GraniteShares.

Diversification Opportunities for IShares Core and GraniteShares

-0.55

Correlation Coefficient

IShares Core  GraniteShares

Excellent diversification

The 3 months correlation between IShares and GraniteShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and GraniteShares 1x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 1x Short and IShares Core 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 iShares Core SP are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 1x Short has no effect on the direction of IShares Core i.e., IShares Core and GraniteShares go up and down completely randomly.

Pair Corralation between IShares Core and GraniteShares

Considering the 90-day investment horizon iShares Core SP is expected to under-perform the GraniteShares. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core SP is 4.96 times less risky than GraniteShares. The etf trades about -0.02 of its potential returns per unit of risk. The GraniteShares 1x Short is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,006  in GraniteShares 1x Short on December 1, 2024 and sell it today you would earn a total of  276.00  from holding GraniteShares 1x Short or generate 27.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

iShares Core SP  vs.  GraniteShares 1x Short

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GraniteShares 1x Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 1x Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, GraniteShares demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and GraniteShares

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

The idea behind iShares Core SP and GraniteShares 1x Short 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.