Correlation Between Vanguard Russell and GraniteShares ETF

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

By analyzing existing cross correlation between Vanguard Russell 1000 and GraniteShares ETF Trust, you can compare the effects of market volatilities on Vanguard Russell and GraniteShares ETF 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 Vanguard Russell with a short position of GraniteShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and GraniteShares ETF.

Diversification Opportunities for Vanguard Russell and GraniteShares ETF

0.79

Correlation Coefficient

Vanguard Russell  GraniteShares ETF

Poor diversification

The 3 months correlation between Vanguard and GraniteShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and GraniteShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares ETF Trust and Vanguard Russell 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 Vanguard Russell 1000 are associated (or correlated) with GraniteShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares ETF Trust has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and GraniteShares ETF go up and down completely randomly.

Pair Corralation between Vanguard Russell and GraniteShares ETF

Given the investment horizon of 90 days Vanguard Russell 1000 is expected to generate 0.99 times more return on investment than GraniteShares ETF. However, Vanguard Russell 1000 is 1.01 times less risky than GraniteShares ETF. It trades about 0.0 of its potential returns per unit of risk. GraniteShares ETF Trust is currently generating about -0.01 per unit of risk. If you would invest  10,244  in Vanguard Russell 1000 on November 28, 2024 and sell it today you would lose (38.00) from holding Vanguard Russell 1000 or give up 0.37% of portfolio value over 90 days.

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

Vanguard Russell 1000  vs.  GraniteShares ETF Trust

Vanguard Russell 1000

Risk-Adjusted Performance

Weak

Over the last 90 days Vanguard Russell 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vanguard Russell is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

GraniteShares ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days GraniteShares ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GraniteShares ETF is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard Russell and GraniteShares ETF

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

The idea behind Vanguard Russell 1000 and GraniteShares ETF Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.