Correlation Between GraniteShares and WisdomTree

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

By analyzing existing cross correlation between GraniteShares 1x Short and WisdomTree SP 500, you can compare the effects of market volatilities on GraniteShares and WisdomTree 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 with a short position of WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and WisdomTree.

Diversification Opportunities for GraniteShares and WisdomTree

0.8

Correlation Coefficient

GraniteShares  WisdomTree

Very poor diversification

The 3 months correlation between GraniteShares and WisdomTree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 1x Short and WisdomTree SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SP 500 and GraniteShares 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 1x Short are associated (or correlated) with WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SP 500 has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree go up and down completely randomly.

Pair Corralation between GraniteShares and WisdomTree

Assuming the 90 days trading horizon GraniteShares 1x Short is expected to under-perform the WisdomTree. But the etf apears to be less risky and, when comparing its historical volatility, GraniteShares 1x Short is 1.59 times less risky than WisdomTree. The etf trades about -0.26 of its potential returns per unit of risk. The WisdomTree SP 500 is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  150,000  in WisdomTree SP 500 on September 13, 2024 and sell it today you would lose (24,575) from holding WisdomTree SP 500 or give up 16.38% of portfolio value over 90 days.

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

GraniteShares 1x Short  vs.  WisdomTree SP 500

GraniteShares 1x Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GraniteShares 1x Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

WisdomTree SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with GraniteShares and WisdomTree

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

The idea behind GraniteShares 1x Short and WisdomTree SP 500 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.