Correlation Between GraniteShares 15x and Vanguard

Can any of the company-specific risk be diversified away by investing in both GraniteShares 15x and Vanguard 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 15x and Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 15x Long and Vanguard SP Mid Cap, you can compare the effects of market volatilities on GraniteShares 15x and Vanguard 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 15x with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 15x and Vanguard.

Diversification Opportunities for GraniteShares 15x and Vanguard

0.73

Correlation Coefficient

GraniteShares 15x  Vanguard

Poor diversification

The 3 months correlation between GraniteShares and Vanguard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 15x Long and Vanguard SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP Mid and GraniteShares 15x 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 15x Long are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP Mid has no effect on the direction of GraniteShares 15x i.e., GraniteShares 15x and Vanguard go up and down completely randomly.

Pair Corralation between GraniteShares 15x and Vanguard

Given the investment horizon of 90 days GraniteShares 15x is expected to generate 1.06 times less return on investment than Vanguard. In addition to that, GraniteShares 15x is 4.06 times more volatile than Vanguard SP Mid Cap. It trades about 0.08 of its total potential returns per unit of risk. Vanguard SP Mid Cap is currently generating about 0.35 per unit of volatility. If you would invest  11,312  in Vanguard SP Mid Cap on September 1, 2024 and sell it today you would earn a total of  1,010  from holding Vanguard SP Mid Cap or generate 8.93% return on investment over 90 days.

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

GraniteShares 15x Long  vs.  Vanguard SP Mid Cap

GraniteShares 15x Long

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 15x Long are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, GraniteShares 15x disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard SP Mid

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with GraniteShares 15x and Vanguard

The main advantage of trading using opposite GraniteShares 15x and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 15x position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.

The idea behind GraniteShares 15x Long and Vanguard SP Mid Cap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.