Correlation Between Eic Value and Goldman Sachs

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

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

Diversification Opportunities for Eic Value and Goldman Sachs

0.84

Correlation Coefficient

Eic Value  Goldman Sachs

Very poor diversification

The 3 months correlation between Eic and Goldman is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Goldman Sachs Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Asia and Eic Value 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 Eic Value Fund 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 Asia has no effect on the direction of Eic Value i.e., Eic Value and Goldman Sachs go up and down completely randomly.

Pair Corralation between Eic Value and Goldman Sachs

Assuming the 90 days horizon Eic Value is expected to generate 1.88 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Eic Value Fund is 1.96 times less risky than Goldman Sachs. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs Asia is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,122  in Goldman Sachs Asia on December 29, 2024 and sell it today you would earn a total of  278.00  from holding Goldman Sachs Asia or generate 13.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Eic Value Fund  vs.  Goldman Sachs Asia

Eic Value Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eic Value Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Eic Value may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goldman Sachs Asia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Asia are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eic Value and Goldman Sachs

The main advantage of trading using opposite Eic Value and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eic Value 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 Eic Value Fund and Goldman Sachs Asia 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.