Correlation Between Solid Power and GraniteShares

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

By analyzing existing cross correlation between Solid Power and GraniteShares 2x Long, you can compare the effects of market volatilities on Solid Power and GraniteShares 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 Solid Power with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and GraniteShares.

Diversification Opportunities for Solid Power and GraniteShares

0.8

Correlation Coefficient

Solid Power  GraniteShares

Very poor diversification

The 3 months correlation between Solid and GraniteShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and GraniteShares 2x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 2x Long and Solid Power 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 Solid Power are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 2x Long has no effect on the direction of Solid Power i.e., Solid Power and GraniteShares go up and down completely randomly.

Pair Corralation between Solid Power and GraniteShares

Given the investment horizon of 90 days Solid Power is expected to generate 2.12 times more return on investment than GraniteShares. However, Solid Power is 2.12 times more volatile than GraniteShares 2x Long. It trades about 0.24 of its potential returns per unit of risk. GraniteShares 2x Long is currently generating about 0.11 per unit of risk. If you would invest  166.00  in Solid Power on May 27, 2025 and sell it today you would earn a total of  312.00  from holding Solid Power or generate 187.95% return on investment over 90 days.

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

Solid Power  vs.  GraniteShares 2x Long

Solid Power

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Solid Power reported solid returns over the last few months and may actually be approaching a breakup point.

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 8 (%) 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.

Pair Trading with Solid Power and GraniteShares

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

The idea behind Solid Power and GraniteShares 2x Long 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.