Correlation Between IShares Core and GraniteShares HIPS

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

By analyzing existing cross correlation between iShares Core SP and GraniteShares HIPS High, you can compare the effects of market volatilities on IShares Core and GraniteShares HIPS 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 IShares Core with a short position of GraniteShares HIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and GraniteShares HIPS.

Diversification Opportunities for IShares Core and GraniteShares HIPS

0.74

Correlation Coefficient

IShares Core  GraniteShares HIPS

Poor diversification

The 3 months correlation between IShares and GraniteShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and GraniteShares HIPS High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares HIPS High and IShares Core 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 iShares Core SP are associated (or correlated) with GraniteShares HIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares HIPS High has no effect on the direction of IShares Core i.e., IShares Core and GraniteShares HIPS go up and down completely randomly.

Pair Corralation between IShares Core and GraniteShares HIPS

Considering the 90-day investment horizon iShares Core SP is expected to generate 1.5 times more return on investment than GraniteShares HIPS. However, IShares Core is 1.5 times more volatile than GraniteShares HIPS High. It trades about 0.14 of its potential returns per unit of risk. GraniteShares HIPS High is currently generating about 0.16 per unit of risk. If you would invest  58,715  in iShares Core SP on August 13, 2024 and sell it today you would earn a total of  1,444  from holding iShares Core SP or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

iShares Core SP  vs.  GraniteShares HIPS High

iShares Core SP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in December 2024.

GraniteShares HIPS High

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares HIPS High are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GraniteShares HIPS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and GraniteShares HIPS

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

The idea behind iShares Core SP and GraniteShares HIPS High 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 Commodity Directory module to find actively traded commodities issued by global exchanges.