Correlation Between GraniteShares and WisdomTree Heating

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

Diversification Opportunities for GraniteShares and WisdomTree Heating

0.74

Correlation Coefficient

GraniteShares  WisdomTree Heating

Poor diversification

The 3 months correlation between GraniteShares and WisdomTree is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Long and WisdomTree Heating Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Heating Oil 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 Heating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Heating Oil has no effect on the direction of GraniteShares i.e., GraniteShares and WisdomTree Heating go up and down completely randomly.

Pair Corralation between GraniteShares and WisdomTree Heating

Assuming the 90 days trading horizon GraniteShares 3x Long is expected to generate 3.87 times more return on investment than WisdomTree Heating. However, GraniteShares is 3.87 times more volatile than WisdomTree Heating Oil. It trades about 0.18 of its potential returns per unit of risk. WisdomTree Heating Oil is currently generating about 0.13 per unit of risk. If you would invest  2,740,000  in GraniteShares 3x Long on April 24, 2025 and sell it today you would earn a total of  2,860,000  from holding GraniteShares 3x Long or generate 104.38% return on investment over 90 days.

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

GraniteShares 3x Long  vs.  WisdomTree Heating Oil

GraniteShares 3x Long

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Long are ranked lower than 14 (%) 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 Heating Oil

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Heating Oil are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Heating unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GraniteShares and WisdomTree Heating

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

The idea behind GraniteShares 3x Long and WisdomTree Heating Oil 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.