Correlation Between Delaware Investments and Goldman Sachs

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

Diversification Opportunities for Delaware Investments and Goldman Sachs

0.18

Correlation Coefficient

Delaware Investments  Goldman Sachs

Average diversification

The 3 months correlation between Delaware and Goldman is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Investments Ultrashor and Goldman Sachs Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Long and Delaware Investments 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 Investments Ultrashort 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 Long has no effect on the direction of Delaware Investments i.e., Delaware Investments and Goldman Sachs go up and down completely randomly.

Pair Corralation between Delaware Investments and Goldman Sachs

Assuming the 90 days horizon Delaware Investments is expected to generate 1.27 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Delaware Investments Ultrashort is 1.71 times less risky than Goldman Sachs. It trades about 0.19 of its potential returns per unit of risk. Goldman Sachs Long is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  747.00  in Goldman Sachs Long on October 10, 2024 and sell it today you would earn a total of  47.00  from holding Goldman Sachs Long or generate 6.29% return on investment over 90 days.

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

Delaware Investments Ultrashor  vs.  Goldman Sachs Long

Delaware Investments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Investments Ultrashort are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Delaware Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Long 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 Investments and Goldman Sachs

The main advantage of trading using opposite Delaware Investments and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delaware Investments 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 Investments Ultrashort and Goldman Sachs Long 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.