Correlation Between Blackrock Health and Goldman Sachs

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

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

Diversification Opportunities for Blackrock Health and Goldman Sachs

0.24

Correlation Coefficient

Blackrock Health  Goldman Sachs

Modest diversification

The 3 months correlation between Blackrock and Goldman is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Goldman Sachs Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Emerging and Blackrock Health 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 Blackrock Health Sciences 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 Emerging has no effect on the direction of Blackrock Health i.e., Blackrock Health and Goldman Sachs go up and down completely randomly.

Pair Corralation between Blackrock Health and Goldman Sachs

Assuming the 90 days horizon Blackrock Health Sciences is expected to under-perform the Goldman Sachs. In addition to that, Blackrock Health is 6.89 times more volatile than Goldman Sachs Emerging. It trades about -0.16 of its total potential returns per unit of risk. Goldman Sachs Emerging is currently generating about 0.41 per unit of volatility. If you would invest  964.00  in Goldman Sachs Emerging on September 16, 2024 and sell it today you would earn a total of  16.00  from holding Goldman Sachs Emerging or generate 1.66% return on investment over 90 days.

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

Blackrock Health Sciences  vs.  Goldman Sachs Emerging

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Health Sciences 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Goldman Sachs Emerging

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Goldman Sachs Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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 Blackrock Health and Goldman Sachs

The main advantage of trading using opposite Blackrock Health and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Health 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 Blackrock Health Sciences and Goldman Sachs Emerging 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.