Correlation Between Columbia Small and Goldman Sachs

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

Diversification Opportunities for Columbia Small and Goldman Sachs

-0.55

Correlation Coefficient

Columbia Small  Goldman Sachs

Excellent diversification

The 3 months correlation between Columbia and Goldman is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Goldman Sachs Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Tactical and Columbia Small 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 Small Cap 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 Tactical has no effect on the direction of Columbia Small i.e., Columbia Small and Goldman Sachs go up and down completely randomly.

Pair Corralation between Columbia Small and Goldman Sachs

Assuming the 90 days horizon Columbia Small Cap is expected to generate 1.76 times more return on investment than Goldman Sachs. However, Columbia Small is 1.76 times more volatile than Goldman Sachs Tactical. It trades about 0.24 of its potential returns per unit of risk. Goldman Sachs Tactical is currently generating about -0.16 per unit of risk. If you would invest  5,378  in Columbia Small Cap on September 26, 2024 and sell it today you would earn a total of  414.00  from holding Columbia Small Cap or generate 7.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	52.38%
Values	Daily Returns

Columbia Small Cap  vs.  Goldman Sachs Tactical

Columbia Small Cap

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Columbia Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Columbia Small showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest fragile performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Columbia Small and Goldman Sachs

The main advantage of trading using opposite Columbia Small and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small 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 Small Cap and Goldman Sachs Tactical 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.