Correlation Between SPDR SP and GraniteShares
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Consumer and GraniteShares 3x Short, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and GraniteShares.
Diversification Opportunities for SPDR SP and GraniteShares
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPDR and GraniteShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Consumer and GraniteShares 3x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Short and SPDR SP 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 SPDR SP Consumer 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 3x Short has no effect on the direction of SPDR SP i.e., SPDR SP and GraniteShares go up and down completely randomly.
Pair Corralation between SPDR SP and GraniteShares
Assuming the 90 days trading horizon SPDR SP Consumer is expected to generate 0.09 times more return on investment than GraniteShares. However, SPDR SP Consumer is 11.52 times less risky than GraniteShares. It trades about 0.02 of its potential returns per unit of risk. GraniteShares 3x Short is currently generating about -0.1 per unit of risk. If you would invest 4,262 in SPDR SP Consumer on September 13, 2024 and sell it today you would earn a total of 30.00 from holding SPDR SP Consumer or generate 0.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR SP Consumer vs. GraniteShares 3x Short
Performance |
Timeline |
SPDR SP Consumer |
GraniteShares 3x Short |
SPDR SP and GraniteShares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SP and GraniteShares
The main advantage of trading using opposite SPDR SP and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.SPDR SP vs. GraniteShares 3x Short | ||
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Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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