Correlation Between Volatility Shares and Goldman Sachs

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

By analyzing existing cross correlation between Volatility Shares Trust and Goldman Sachs Access, you can compare the effects of market volatilities on Volatility Shares and Goldman Sachs 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 Volatility Shares with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Goldman Sachs.

Diversification Opportunities for Volatility Shares and Goldman Sachs

-0.55

Correlation Coefficient

Volatility Shares  Goldman Sachs

Excellent diversification

The 3 months correlation between Volatility and Goldman is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Access has no effect on the direction of Volatility Shares i.e., Volatility Shares and Goldman Sachs go up and down completely randomly.

Pair Corralation between Volatility Shares and Goldman Sachs

Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 33.21 times more return on investment than Goldman Sachs. However, Volatility Shares is 33.21 times more volatile than Goldman Sachs Access. It trades about 0.19 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about -0.17 per unit of risk. If you would invest  3,857  in Volatility Shares Trust on October 9, 2024 and sell it today you would earn a total of  2,349  from holding Volatility Shares Trust or generate 60.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Volatility Shares Trust  vs.  Goldman Sachs Access

Volatility Shares Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volatility Shares Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Volatility Shares showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Access

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Access has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Volatility Shares and Goldman Sachs

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

The idea behind Volatility Shares Trust and Goldman Sachs Access 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.