Correlation Between GraniteShares 125x and Vanguard Ultra

Can any of the company-specific risk be diversified away by investing in both GraniteShares 125x and Vanguard Ultra 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 125x and Vanguard Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 125x Long and Vanguard Ultra Short Bond, you can compare the effects of market volatilities on GraniteShares 125x and Vanguard Ultra 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 125x with a short position of Vanguard Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 125x and Vanguard Ultra.

Diversification Opportunities for GraniteShares 125x and Vanguard Ultra

0.94

Correlation Coefficient

GraniteShares 125x  Vanguard Ultra

Almost no diversification

The 3 months correlation between GraniteShares and Vanguard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 125x Long and Vanguard Ultra Short Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Ultra Short and GraniteShares 125x 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 125x Long are associated (or correlated) with Vanguard Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Ultra Short has no effect on the direction of GraniteShares 125x i.e., GraniteShares 125x and Vanguard Ultra go up and down completely randomly.

Pair Corralation between GraniteShares 125x and Vanguard Ultra

Considering the 90-day investment horizon GraniteShares 125x Long is expected to generate 97.06 times more return on investment than Vanguard Ultra. However, GraniteShares 125x is 97.06 times more volatile than Vanguard Ultra Short Bond. It trades about 0.08 of its potential returns per unit of risk. Vanguard Ultra Short Bond is currently generating about 0.43 per unit of risk. If you would invest  1,101  in GraniteShares 125x Long on September 27, 2024 and sell it today you would earn a total of  1,046  from holding GraniteShares 125x Long or generate 95.0% return on investment over 90 days.

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

GraniteShares 125x Long  vs.  Vanguard Ultra Short Bond

GraniteShares 125x Long

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 125x Long are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, GraniteShares 125x disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Ultra Short

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Ultra Short Bond are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vanguard Ultra is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares 125x and Vanguard Ultra

The main advantage of trading using opposite GraniteShares 125x and Vanguard Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 125x position performs unexpectedly, Vanguard Ultra 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 Vanguard Ultra will offset losses from the drop in Vanguard Ultra's long position.

The idea behind GraniteShares 125x Long and Vanguard Ultra Short Bond 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.