Correlation Between IShares and Goldman Sachs

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

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

Diversification Opportunities for IShares and Goldman Sachs

-0.43

Correlation Coefficient

IShares  Goldman Sachs

Very good diversification

The 3 months correlation between IShares and Goldman is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding IShares and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and IShares 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 IShares 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 Future has no effect on the direction of IShares i.e., IShares and Goldman Sachs go up and down completely randomly.

Pair Corralation between IShares and Goldman Sachs

If you would invest  2,928  in Goldman Sachs Future on September 15, 2024 and sell it today you would earn a total of  475.00  from holding Goldman Sachs Future or generate 16.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

IShares  vs.  Goldman Sachs Future

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, IShares is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Goldman Sachs Future

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish technical and fundamental indicators, Goldman Sachs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares and Goldman Sachs

The main advantage of trading using opposite IShares and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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 IShares and Goldman Sachs Future 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.