Correlation Between Tidal ETF and Goldman Sachs

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

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

Diversification Opportunities for Tidal ETF and Goldman Sachs

0.64

Correlation Coefficient

Tidal ETF  Goldman Sachs

Poor diversification

The 3 months correlation between Tidal and Goldman is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tidal ETF Trust and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and Tidal ETF 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 Tidal ETF 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 MarketBeta has no effect on the direction of Tidal ETF i.e., Tidal ETF and Goldman Sachs go up and down completely randomly.

Pair Corralation between Tidal ETF and Goldman Sachs

Given the investment horizon of 90 days Tidal ETF Trust is expected to under-perform the Goldman Sachs. But the etf apears to be less risky and, when comparing its historical volatility, Tidal ETF Trust is 1.29 times less risky than Goldman Sachs. The etf trades about -0.22 of its potential returns per unit of risk. The Goldman Sachs MarketBeta is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  8,290  in Goldman Sachs MarketBeta on October 11, 2024 and sell it today you would lose (153.00) from holding Goldman Sachs MarketBeta or give up 1.85% of portfolio value over 90 days.

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

Tidal ETF Trust  vs.  Goldman Sachs MarketBeta

Tidal ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tidal ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Goldman Sachs MarketBeta

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs MarketBeta are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tidal ETF and Goldman Sachs

The main advantage of trading using opposite Tidal ETF and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal ETF 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 Tidal ETF Trust and Goldman Sachs MarketBeta 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.