Correlation Between IShares SP and GraniteShares ETF

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

By analyzing existing cross correlation between iShares SP 500 and GraniteShares ETF Trust, you can compare the effects of market volatilities on IShares SP 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 IShares SP with a short position of GraniteShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and GraniteShares ETF.

Diversification Opportunities for IShares SP and GraniteShares ETF

0.97

Correlation Coefficient

IShares SP  GraniteShares ETF

Almost no diversification

The 3 months correlation between IShares and GraniteShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 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 IShares 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 iShares SP 500 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 IShares SP i.e., IShares SP and GraniteShares ETF go up and down completely randomly.

Pair Corralation between IShares SP and GraniteShares ETF

Considering the 90-day investment horizon iShares SP 500 is expected to generate 0.97 times more return on investment than GraniteShares ETF. However, iShares SP 500 is 1.03 times less risky than GraniteShares ETF. It trades about 0.1 of its potential returns per unit of risk. GraniteShares ETF Trust is currently generating about 0.07 per unit of risk. If you would invest  8,209  in iShares SP 500 on August 23, 2024 and sell it today you would earn a total of  1,754  from holding iShares SP 500 or generate 21.37% return on investment over 90 days.

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

iShares SP 500  vs.  GraniteShares ETF Trust

iShares SP 500

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GraniteShares ETF Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares ETF Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, GraniteShares ETF is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares SP and GraniteShares ETF

The main advantage of trading using opposite IShares SP and GraniteShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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 iShares SP 500 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 Global Correlations module to find global opportunities by holding instruments from different markets.