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 Global, 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

0.74

Correlation Coefficient

Eic Value  Goldman Sachs

Poor diversification

The 3 months correlation between Eic and Goldman is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global 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 Global 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 Fund is expected to generate 2.95 times more return on investment than Goldman Sachs. However, Eic Value is 2.95 times more volatile than Goldman Sachs Global. It trades about 0.18 of its potential returns per unit of risk. Goldman Sachs Global is currently generating about 0.03 per unit of risk. If you would invest  1,672  in Eic Value Fund on December 20, 2024 and sell it today you would earn a total of  128.00  from holding Eic Value Fund or generate 7.66% return on investment over 90 days.

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

Eic Value Fund  vs.  Goldman Sachs Global

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 14 (%) 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 Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Global are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 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 Global 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.