Correlation Between GraniteShares and IShares Treasury

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

By analyzing existing cross correlation between GraniteShares 3x Long and iShares Treasury Bond, you can compare the effects of market volatilities on GraniteShares and IShares Treasury 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 IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and IShares Treasury.

Diversification Opportunities for GraniteShares and IShares Treasury

-0.88

Correlation Coefficient

GraniteShares  IShares Treasury

Pay attention - limited upside

The 3 months correlation between GraniteShares and IShares is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Bond 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 3x Long are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of GraniteShares i.e., GraniteShares and IShares Treasury go up and down completely randomly.

Pair Corralation between GraniteShares and IShares Treasury

Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 4.52 times more return on investment than IShares Treasury. However, GraniteShares is 4.52 times more volatile than iShares Treasury Bond. It trades about 0.16 of its potential returns per unit of risk. iShares Treasury Bond is currently generating about -0.07 per unit of risk. If you would invest  6,771  in GraniteShares 3x Long on August 24, 2024 and sell it today you would earn a total of  930.00  from holding GraniteShares 3x Long or generate 13.74% return on investment over 90 days.

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

GraniteShares 3x Long  vs.  iShares Treasury Bond

GraniteShares 3x Long

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Long are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares Treasury Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Treasury Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with GraniteShares and IShares Treasury

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

The idea behind GraniteShares 3x Long and iShares Treasury 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.