Correlation Between GraniteShares and WisdomTree Europe

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

By analyzing existing cross correlation between GraniteShares 2x Long and WisdomTree Europe SmallCap, you can compare the effects of market volatilities on GraniteShares and WisdomTree Europe 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 WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and WisdomTree Europe.

Diversification Opportunities for GraniteShares and WisdomTree Europe

-0.16

Correlation Coefficient

GraniteShares  WisdomTree Europe

Good diversification

The 3 months correlation between GraniteShares and WisdomTree is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 2x Long and WisdomTree Europe SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe 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 2x Long are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree Europe go up and down completely randomly.

Pair Corralation between GraniteShares and WisdomTree Europe

Given the investment horizon of 90 days GraniteShares 2x Long is expected to generate 9.52 times more return on investment than WisdomTree Europe. However, GraniteShares is 9.52 times more volatile than WisdomTree Europe SmallCap. It trades about 0.09 of its potential returns per unit of risk. WisdomTree Europe SmallCap is currently generating about 0.05 per unit of risk. If you would invest  1,950  in GraniteShares 2x Long on July 5, 2025 and sell it today you would earn a total of  537.00  from holding GraniteShares 2x Long or generate 27.54% return on investment over 90 days.

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

GraniteShares 2x Long  vs.  WisdomTree Europe SmallCap

GraniteShares 2x Long

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 2x Long are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, GraniteShares disclosed solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Europe

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Europe SmallCap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, WisdomTree Europe is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GraniteShares and WisdomTree Europe

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

The idea behind GraniteShares 2x Long and WisdomTree Europe SmallCap 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.