Correlation Between Astor Longshort and Goldman Sachs

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

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

Diversification Opportunities for Astor Longshort and Goldman Sachs

-0.28

Correlation Coefficient

Astor Longshort  Goldman Sachs

Very good diversification

The 3 months correlation between Astor and Goldman is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Astor Longshort Fund and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Astor Longshort 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 Astor Longshort Fund 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 Short has no effect on the direction of Astor Longshort i.e., Astor Longshort and Goldman Sachs go up and down completely randomly.

Pair Corralation between Astor Longshort and Goldman Sachs

Assuming the 90 days horizon Astor Longshort Fund is expected to under-perform the Goldman Sachs. In addition to that, Astor Longshort is 4.44 times more volatile than Goldman Sachs Short. It trades about -0.05 of its total potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.21 per unit of volatility. If you would invest  960.00  in Goldman Sachs Short on December 29, 2024 and sell it today you would earn a total of  14.00  from holding Goldman Sachs Short or generate 1.46% return on investment over 90 days.

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

Astor Longshort Fund  vs.  Goldman Sachs Short

Astor Longshort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astor Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Astor Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Astor Longshort and Goldman Sachs

The main advantage of trading using opposite Astor Longshort and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astor Longshort 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 Astor Longshort Fund and Goldman Sachs Short 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.