Correlation Between WisdomTree International and Goldman Sachs

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

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

Diversification Opportunities for WisdomTree International and Goldman Sachs

0.63

Correlation Coefficient

WisdomTree International  Goldman Sachs

Poor diversification

The 3 months correlation between WisdomTree and Goldman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Al and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and WisdomTree International 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 WisdomTree International Al 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 Future has no effect on the direction of WisdomTree International i.e., WisdomTree International and Goldman Sachs go up and down completely randomly.

Pair Corralation between WisdomTree International and Goldman Sachs

Given the investment horizon of 90 days WisdomTree International Al is expected to generate 0.56 times more return on investment than Goldman Sachs. However, WisdomTree International Al is 1.8 times less risky than Goldman Sachs. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Future is currently generating about -0.03 per unit of risk. If you would invest  4,062  in WisdomTree International Al on December 1, 2024 and sell it today you would earn a total of  172.00  from holding WisdomTree International Al or generate 4.23% return on investment over 90 days.

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

WisdomTree International Al  vs.  Goldman Sachs Future

WisdomTree International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International Al are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, WisdomTree International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Goldman Sachs Future

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with WisdomTree International and Goldman Sachs

The main advantage of trading using opposite WisdomTree International and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International 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 WisdomTree International Al and Goldman Sachs Future 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.