Correlation Between Blackrock Moderate and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Blackrock Moderate 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 Moderate 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 Moderate Prepared and Goldman Sachs Strategic, you can compare the effects of market volatilities on Blackrock Moderate 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 Moderate with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Moderate and Goldman Sachs.

Diversification Opportunities for Blackrock Moderate and Goldman Sachs

0.46

Correlation Coefficient

Blackrock Moderate  Goldman Sachs

Very weak diversification

The 3 months correlation between Blackrock and Goldman is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and Goldman Sachs Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Strategic and Blackrock Moderate 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 Moderate Prepared 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 Strategic has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and Goldman Sachs go up and down completely randomly.

Pair Corralation between Blackrock Moderate and Goldman Sachs

Assuming the 90 days horizon Blackrock Moderate Prepared is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Moderate Prepared is 4.48 times less risky than Goldman Sachs. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Goldman Sachs Strategic is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,405  in Goldman Sachs Strategic on September 26, 2024 and sell it today you would lose (3.00) from holding Goldman Sachs Strategic or give up 0.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Blackrock Moderate Prepared  vs.  Goldman Sachs Strategic

Blackrock Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Goldman Sachs Strategic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Strategic are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Moderate and Goldman Sachs

The main advantage of trading using opposite Blackrock Moderate and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Moderate 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 Moderate Prepared and Goldman Sachs Strategic 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.