Correlation Between IShares Bloomberg and Goldman Sachs

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

Diversification Opportunities for IShares Bloomberg and Goldman Sachs

0.65

Correlation Coefficient

IShares Bloomberg  Goldman Sachs

Poor diversification

The 3 months correlation between IShares and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Bloomberg Roll and Goldman Sachs Physical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Physical and IShares Bloomberg 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 Bloomberg Roll 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 Physical has no effect on the direction of IShares Bloomberg i.e., IShares Bloomberg and Goldman Sachs go up and down completely randomly.

Pair Corralation between IShares Bloomberg and Goldman Sachs

Given the investment horizon of 90 days IShares Bloomberg is expected to generate 2.06 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, iShares Bloomberg Roll is 1.25 times less risky than Goldman Sachs. It trades about 0.21 of its potential returns per unit of risk. Goldman Sachs Physical is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,577  in Goldman Sachs Physical on December 29, 2024 and sell it today you would earn a total of  468.00  from holding Goldman Sachs Physical or generate 18.16% return on investment over 90 days.

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

iShares Bloomberg Roll  vs.  Goldman Sachs Physical

iShares Bloomberg Roll

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Bloomberg Roll are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, IShares Bloomberg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goldman Sachs Physical

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Physical are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Bloomberg and Goldman Sachs

The main advantage of trading using opposite IShares Bloomberg and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Bloomberg 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 Bloomberg Roll and Goldman Sachs Physical 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.