Correlation Between Columbia Global and Goldman Sachs

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

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

Diversification Opportunities for Columbia Global and Goldman Sachs

0.97

Correlation Coefficient

Columbia Global  Goldman Sachs

Almost no diversification

The 3 months correlation between Columbia and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and Columbia Global 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 Columbia Global Technology 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 Technology has no effect on the direction of Columbia Global i.e., Columbia Global and Goldman Sachs go up and down completely randomly.

Pair Corralation between Columbia Global and Goldman Sachs

Assuming the 90 days horizon Columbia Global is expected to generate 1.27 times less return on investment than Goldman Sachs. In addition to that, Columbia Global is 1.1 times more volatile than Goldman Sachs Technology. It trades about 0.14 of its total potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.19 per unit of volatility. If you would invest  3,115  in Goldman Sachs Technology on August 31, 2024 and sell it today you would earn a total of  436.00  from holding Goldman Sachs Technology or generate 14.0% return on investment over 90 days.

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

Columbia Global Technology  vs.  Goldman Sachs Technology

Columbia Global Tech

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Goldman Sachs Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Global and Goldman Sachs

The main advantage of trading using opposite Columbia Global and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Global 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 Columbia Global Technology and Goldman Sachs Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.