Correlation Between Lebenthal Lisanti and Goldman Sachs

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

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

Diversification Opportunities for Lebenthal Lisanti and Goldman Sachs

0.71

Correlation Coefficient

Lebenthal Lisanti  Goldman Sachs

Poor diversification

The 3 months correlation between Lebenthal and Goldman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lebenthal Lisanti Small and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large and Lebenthal Lisanti 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 Lebenthal Lisanti Small 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 Large has no effect on the direction of Lebenthal Lisanti i.e., Lebenthal Lisanti and Goldman Sachs go up and down completely randomly.

Pair Corralation between Lebenthal Lisanti and Goldman Sachs

Assuming the 90 days horizon Lebenthal Lisanti Small is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lebenthal Lisanti Small is 1.21 times less risky than Goldman Sachs. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Goldman Sachs Large is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  3,768  in Goldman Sachs Large on December 2, 2024 and sell it today you would lose (475.00) from holding Goldman Sachs Large or give up 12.61% of portfolio value over 90 days.

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

Lebenthal Lisanti Small  vs.  Goldman Sachs Large

Lebenthal Lisanti Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lebenthal Lisanti Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Goldman Sachs Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Lebenthal Lisanti and Goldman Sachs

The main advantage of trading using opposite Lebenthal Lisanti and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lebenthal Lisanti 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 Lebenthal Lisanti Small and Goldman Sachs Large 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.