Correlation Between Discipline Fund and Goldman Sachs

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

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

Diversification Opportunities for Discipline Fund and Goldman Sachs

0.49

Correlation Coefficient

Discipline Fund  Goldman Sachs

Very weak diversification

The 3 months correlation between Discipline and Goldman is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Discipline Fund ETF and Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Discipline Fund 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 Discipline Fund ETF 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 has no effect on the direction of Discipline Fund i.e., Discipline Fund and Goldman Sachs go up and down completely randomly.

Pair Corralation between Discipline Fund and Goldman Sachs

If you would invest  800.00  in Goldman Sachs on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Goldman Sachs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.67%
Values	Daily Returns

Discipline Fund ETF  vs.  Goldman Sachs

Discipline Fund ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Discipline Fund ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Discipline Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Goldman Sachs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Discipline Fund and Goldman Sachs

The main advantage of trading using opposite Discipline Fund and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discipline Fund 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 Discipline Fund ETF and Goldman Sachs 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.