Correlation Between Leverage Shares and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Leverage 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 Leverage 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 Leverage Shares 2x and Goldman Sachs Global, you can compare the effects of market volatilities on Leverage 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 Leverage Shares with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Goldman Sachs.
Diversification Opportunities for Leverage Shares and Goldman Sachs
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leverage and Goldman is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global and Leverage 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 Leverage Shares 2x 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 Global has no effect on the direction of Leverage Shares i.e., Leverage Shares and Goldman Sachs go up and down completely randomly.
Pair Corralation between Leverage Shares and Goldman Sachs
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 13.62 times more return on investment than Goldman Sachs. However, Leverage Shares is 13.62 times more volatile than Goldman Sachs Global. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs Global is currently generating about 0.05 per unit of risk. If you would invest 276,850 in Leverage Shares 2x on August 30, 2024 and sell it today you would earn a total of 370,450 from holding Leverage Shares 2x or generate 133.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 40.76% |
| Values | Daily Returns |
Leverage Shares 2x vs. Goldman Sachs Global
Performance |
| Timeline |
| Leverage Shares 2x |
| Goldman Sachs Global |
Leverage Shares and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Goldman Sachs
The main advantage of trading using opposite Leverage Shares and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage 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.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| Goldman Sachs vs. Vanguard FTSE Developed | Goldman Sachs vs. Leverage Shares 2x | Goldman Sachs vs. Amundi Index Solutions | Goldman Sachs vs. Amundi Index Solutions |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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