Correlation Between Dream Office and GOLDMAN SACHS

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

By analyzing existing cross correlation between Dream Office Real and GOLDMAN SACHS CDR, you can compare the effects of market volatilities on Dream Office 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 Dream Office with a short position of GOLDMAN SACHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and GOLDMAN SACHS.

Diversification Opportunities for Dream Office and GOLDMAN SACHS

-0.68

Correlation Coefficient

Dream Office  GOLDMAN SACHS

Excellent diversification

The 3 months correlation between Dream and GOLDMAN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS CDR and Dream Office 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 Dream Office Real 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 CDR has no effect on the direction of Dream Office i.e., Dream Office and GOLDMAN SACHS go up and down completely randomly.

Pair Corralation between Dream Office and GOLDMAN SACHS

Assuming the 90 days trading horizon Dream Office Real is expected to under-perform the GOLDMAN SACHS. In addition to that, Dream Office is 1.23 times more volatile than GOLDMAN SACHS CDR. It trades about -0.22 of its total potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about -0.04 per unit of volatility. If you would invest  2,961  in GOLDMAN SACHS CDR on October 7, 2024 and sell it today you would lose (79.00) from holding GOLDMAN SACHS CDR or give up 2.67% of portfolio value over 90 days.

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

Dream Office Real  vs.  GOLDMAN SACHS CDR

Dream Office Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Office Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

GOLDMAN SACHS CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, GOLDMAN SACHS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dream Office and GOLDMAN SACHS

The main advantage of trading using opposite Dream Office and GOLDMAN SACHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Office 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's long position.

The idea behind Dream Office Real and GOLDMAN SACHS CDR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .