Correlation Between Tradr 2X and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Tradr 2X 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 Tradr 2X and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tradr 2X and Goldman Sachs

-0.11

Correlation Coefficient

Tradr 2X  Goldman Sachs

Good diversification

The 3 months correlation between Tradr and Goldman is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Tradr 2X Long and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF and Tradr 2X 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 Tradr 2X Long 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 ETF has no effect on the direction of Tradr 2X i.e., Tradr 2X and Goldman Sachs go up and down completely randomly.

Pair Corralation between Tradr 2X and Goldman Sachs

Given the investment horizon of 90 days Tradr 2X Long is expected to generate 9.26 times more return on investment than Goldman Sachs. However, Tradr 2X is 9.26 times more volatile than Goldman Sachs ETF. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs ETF is currently generating about -0.01 per unit of risk. If you would invest  2,829  in Tradr 2X Long on December 29, 2024 and sell it today you would earn a total of  201.00  from holding Tradr 2X Long or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.74%
Values	Daily Returns

Tradr 2X Long  vs.  Goldman Sachs ETF

Tradr 2X Long

Risk-Adjusted Performance

OK

Over the last 90 days Tradr 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Tradr 2X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goldman Sachs ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tradr 2X and Goldman Sachs

The main advantage of trading using opposite Tradr 2X and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradr 2X 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 Tradr 2X Long and Goldman Sachs ETF 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.