Correlation Between GraniteShares 15x and IShares Transportation

Can any of the company-specific risk be diversified away by investing in both GraniteShares 15x and IShares Transportation 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 15x and IShares Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 15x Long and iShares Transportation Average, you can compare the effects of market volatilities on GraniteShares 15x and IShares Transportation 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 15x with a short position of IShares Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 15x and IShares Transportation.

Diversification Opportunities for GraniteShares 15x and IShares Transportation

0.64

Correlation Coefficient

GraniteShares 15x  IShares Transportation

Poor diversification

The 3 months correlation between GraniteShares and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 15x Long and iShares Transportation Average in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Transportation and GraniteShares 15x 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 15x Long are associated (or correlated) with IShares Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Transportation has no effect on the direction of GraniteShares 15x i.e., GraniteShares 15x and IShares Transportation go up and down completely randomly.

Pair Corralation between GraniteShares 15x and IShares Transportation

Given the investment horizon of 90 days GraniteShares 15x Long is expected to generate 5.21 times more return on investment than IShares Transportation. However, GraniteShares 15x is 5.21 times more volatile than iShares Transportation Average. It trades about 0.03 of its potential returns per unit of risk. iShares Transportation Average is currently generating about 0.04 per unit of risk. If you would invest  7,030  in GraniteShares 15x Long on September 29, 2024 and sell it today you would lose (93.00) from holding GraniteShares 15x Long or give up 1.32% of portfolio value over 90 days.

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

GraniteShares 15x Long  vs.  iShares Transportation Average

GraniteShares 15x Long

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 15x Long are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, GraniteShares 15x disclosed solid returns over the last few months and may actually be approaching a breakup point.

iShares Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Transportation Average has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Transportation 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 GraniteShares 15x and IShares Transportation

The main advantage of trading using opposite GraniteShares 15x and IShares Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 15x position performs unexpectedly, IShares Transportation 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 Transportation will offset losses from the drop in IShares Transportation's long position.

The idea behind GraniteShares 15x Long and iShares Transportation Average 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.