Correlation Between GraniteShares and First Trust

Can any of the company-specific risk be diversified away by investing in both GraniteShares and First Trust 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 First Trust 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 First Trust SSI, you can compare the effects of market volatilities on GraniteShares and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and First Trust.

Diversification Opportunities for GraniteShares and First Trust

0.57

Correlation Coefficient

GraniteShares  First Trust

Very weak diversification

The 3 months correlation between GraniteShares and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 2x Long and First Trust SSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust SSI 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust SSI has no effect on the direction of GraniteShares i.e., GraniteShares and First Trust go up and down completely randomly.

Pair Corralation between GraniteShares and First Trust

Given the investment horizon of 90 days GraniteShares 2x Long is expected to generate 11.8 times more return on investment than First Trust. However, GraniteShares is 11.8 times more volatile than First Trust SSI. It trades about 0.13 of its potential returns per unit of risk. First Trust SSI is currently generating about 0.37 per unit of risk. If you would invest  1,534  in GraniteShares 2x Long on May 1, 2025 and sell it today you would earn a total of  667.00  from holding GraniteShares 2x Long or generate 43.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

GraniteShares 2x Long  vs.  First Trust SSI

GraniteShares 2x Long

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 2x Long are ranked lower than 9 (%) 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.

First Trust SSI

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust SSI are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with GraniteShares and First Trust

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

The idea behind GraniteShares 2x Long and First Trust SSI 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.