Correlation Between SmartETFs Dividend and Goldman Sachs

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

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

Diversification Opportunities for SmartETFs Dividend and Goldman Sachs

0.61

Correlation Coefficient

SmartETFs Dividend  Goldman Sachs

Poor diversification

The 3 months correlation between SmartETFs and Goldman is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Dividend Builder and Goldman Sachs ActiveBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ActiveBeta and SmartETFs Dividend 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 SmartETFs Dividend Builder 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 ActiveBeta has no effect on the direction of SmartETFs Dividend i.e., SmartETFs Dividend and Goldman Sachs go up and down completely randomly.

Pair Corralation between SmartETFs Dividend and Goldman Sachs

Given the investment horizon of 90 days SmartETFs Dividend Builder is expected to generate 0.76 times more return on investment than Goldman Sachs. However, SmartETFs Dividend Builder is 1.32 times less risky than Goldman Sachs. It trades about 0.05 of its potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about -0.03 per unit of risk. If you would invest  2,932  in SmartETFs Dividend Builder on September 3, 2024 and sell it today you would earn a total of  55.00  from holding SmartETFs Dividend Builder or generate 1.88% return on investment over 90 days.

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

SmartETFs Dividend Builder  vs.  Goldman Sachs ActiveBeta

SmartETFs Dividend

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Dividend Builder are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SmartETFs Dividend is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs ActiveBeta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SmartETFs Dividend and Goldman Sachs

The main advantage of trading using opposite SmartETFs Dividend and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartETFs Dividend 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 SmartETFs Dividend Builder and Goldman Sachs ActiveBeta 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.