Correlation Between Delaware Small and Goldman Sachs

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

Diversification Opportunities for Delaware Small and Goldman Sachs

0.87

Correlation Coefficient

Delaware Small  Goldman Sachs

Very poor diversification

The 3 months correlation between Delaware and Goldman is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Small Cap and Goldman Sachs Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mid and Delaware 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 Delaware 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 Mid has no effect on the direction of Delaware Small i.e., Delaware Small and Goldman Sachs go up and down completely randomly.

Pair Corralation between Delaware Small and Goldman Sachs

Assuming the 90 days horizon Delaware Small Cap is expected to generate 0.48 times more return on investment than Goldman Sachs. However, Delaware Small Cap is 2.09 times less risky than Goldman Sachs. It trades about -0.03 of its potential returns per unit of risk. Goldman Sachs Mid is currently generating about -0.19 per unit of risk. If you would invest  7,633  in Delaware Small Cap on September 15, 2024 and sell it today you would lose (46.00) from holding Delaware Small Cap or give up 0.6% of portfolio value over 90 days.

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

Delaware Small Cap  vs.  Goldman Sachs Mid

Delaware Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Delaware Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delaware Small and Goldman Sachs

The main advantage of trading using opposite Delaware Small and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delaware 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 Delaware Small Cap and Goldman Sachs Mid 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.