Correlation Between YieldMax Universe and Goldman Sachs

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

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

Diversification Opportunities for YieldMax Universe and Goldman Sachs

-0.04

Correlation Coefficient

YieldMax Universe  Goldman Sachs

Good diversification

The 3 months correlation between YieldMax and Goldman is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding YieldMax Universe 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 YieldMax Universe 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 YieldMax Universe 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 YieldMax Universe i.e., YieldMax Universe and Goldman Sachs go up and down completely randomly.

Pair Corralation between YieldMax Universe and Goldman Sachs

Given the investment horizon of 90 days YieldMax Universe is expected to under-perform the Goldman Sachs. In addition to that, YieldMax Universe is 8.3 times more volatile than Goldman Sachs ETF. It trades about -0.09 of its total potential returns per unit of risk. Goldman Sachs ETF is currently generating about -0.01 per unit of volatility. If you would invest  4,954  in Goldman Sachs ETF on December 30, 2024 and sell it today you would lose (6.00) from holding Goldman Sachs ETF or give up 0.12% of portfolio value over 90 days.

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

YieldMax Universe  vs.  Goldman Sachs ETF

YieldMax Universe

Risk-Adjusted Performance

Very Weak

Over the last 90 days YieldMax Universe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

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 YieldMax Universe and Goldman Sachs

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

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.