Correlation Between Alpine Ultra and Goldman Sachs

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

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

Diversification Opportunities for Alpine Ultra and Goldman Sachs

-0.23

Correlation Coefficient

Alpine Ultra  Goldman Sachs

Very good diversification

The 3 months correlation between Alpine and Goldman is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Ultra Short and Goldman Sachs Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Capital and Alpine Ultra 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 Alpine Ultra Short 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 Capital has no effect on the direction of Alpine Ultra i.e., Alpine Ultra and Goldman Sachs go up and down completely randomly.

Pair Corralation between Alpine Ultra and Goldman Sachs

Assuming the 90 days horizon Alpine Ultra Short is expected to generate 0.04 times more return on investment than Goldman Sachs. However, Alpine Ultra Short is 26.16 times less risky than Goldman Sachs. It trades about 0.17 of its potential returns per unit of risk. Goldman Sachs Capital is currently generating about -0.07 per unit of risk. If you would invest  1,003  in Alpine Ultra Short on October 12, 2024 and sell it today you would earn a total of  6.00  from holding Alpine Ultra Short or generate 0.6% return on investment over 90 days.

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

Alpine Ultra Short  vs.  Goldman Sachs Capital

Alpine Ultra Short

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Ultra Short are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alpine Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alpine Ultra and Goldman Sachs

The main advantage of trading using opposite Alpine Ultra and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine Ultra 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 Alpine Ultra Short and Goldman Sachs Capital 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.