Correlation Between Short-intermediate and Goldman Sachs

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

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

Diversification Opportunities for Short-intermediate and Goldman Sachs

0.43

Correlation Coefficient

Short-intermediate  Goldman Sachs

Very weak diversification

The 3 months correlation between Short-intermediate and Goldman is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Short Intermediate Bond Fund and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Short-intermediate 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 Short Intermediate Bond 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 Clean has no effect on the direction of Short-intermediate i.e., Short-intermediate and Goldman Sachs go up and down completely randomly.

Pair Corralation between Short-intermediate and Goldman Sachs

Assuming the 90 days horizon Short Intermediate Bond Fund is expected to generate 0.1 times more return on investment than Goldman Sachs. However, Short Intermediate Bond Fund is 9.73 times less risky than Goldman Sachs. It trades about -0.05 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.26 per unit of risk. If you would invest  903.00  in Short Intermediate Bond Fund on October 5, 2024 and sell it today you would lose (3.00) from holding Short Intermediate Bond Fund or give up 0.33% of portfolio value over 90 days.

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

Short Intermediate Bond Fund  vs.  Goldman Sachs Clean

Short Intermediate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Intermediate Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Short-intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Short-intermediate and Goldman Sachs

The main advantage of trading using opposite Short-intermediate and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-intermediate 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 Short Intermediate Bond Fund and Goldman Sachs Clean 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.