Correlation Between GraniteShares 15x and IShares BBB

Can any of the company-specific risk be diversified away by investing in both GraniteShares 15x and IShares BBB 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 BBB 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 BBB Rated, you can compare the effects of market volatilities on GraniteShares 15x and IShares BBB 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 BBB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 15x and IShares BBB.

Diversification Opportunities for GraniteShares 15x and IShares BBB

-0.34

Correlation Coefficient

GraniteShares 15x  IShares BBB

Very good diversification

The 3 months correlation between GraniteShares and IShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 15x Long and iShares BBB Rated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BBB Rated 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 BBB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BBB Rated has no effect on the direction of GraniteShares 15x i.e., GraniteShares 15x and IShares BBB go up and down completely randomly.

Pair Corralation between GraniteShares 15x and IShares BBB

Given the investment horizon of 90 days GraniteShares 15x Long is expected to generate 16.34 times more return on investment than IShares BBB. However, GraniteShares 15x is 16.34 times more volatile than iShares BBB Rated. It trades about 0.03 of its potential returns per unit of risk. iShares BBB Rated is currently generating about -0.43 per unit of risk. If you would invest  7,594  in GraniteShares 15x Long on October 7, 2024 and sell it today you would earn a total of  74.00  from holding GraniteShares 15x Long or generate 0.97% return on investment over 90 days.

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

GraniteShares 15x Long  vs.  iShares BBB Rated

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 uncertain fundamental indicators, GraniteShares 15x disclosed solid returns over the last few months and may actually be approaching a breakup point.

iShares BBB Rated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares BBB Rated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, IShares BBB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares 15x and IShares BBB

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

The idea behind GraniteShares 15x Long and iShares BBB Rated 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.