Correlation Between GraniteShares and WisdomTree Gold

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

By analyzing existing cross correlation between GraniteShares 3x Long and WisdomTree Gold 3x, you can compare the effects of market volatilities on GraniteShares and WisdomTree Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and WisdomTree Gold.

Diversification Opportunities for GraniteShares and WisdomTree Gold

-0.61

Correlation Coefficient

GraniteShares  WisdomTree Gold

Excellent diversification

The 3 months correlation between GraniteShares and WisdomTree is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and WisdomTree Gold 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Gold 3x 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 3x Long are associated (or correlated) with WisdomTree Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Gold 3x has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree Gold go up and down completely randomly.

Pair Corralation between GraniteShares and WisdomTree Gold

Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 1.23 times more return on investment than WisdomTree Gold. However, GraniteShares is 1.23 times more volatile than WisdomTree Gold 3x. It trades about 0.09 of its potential returns per unit of risk. WisdomTree Gold 3x is currently generating about -0.04 per unit of risk. If you would invest  780,000  in GraniteShares 3x Long on April 24, 2025 and sell it today you would earn a total of  165,000  from holding GraniteShares 3x Long or generate 21.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

GraniteShares 3x Long  vs.  WisdomTree Gold 3x

GraniteShares 3x Long

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Long are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Gold 3x

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Gold 3x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with GraniteShares and WisdomTree Gold

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

The idea behind GraniteShares 3x Long and WisdomTree Gold 3x 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..