Correlation Between First Industrial and Goldman Sachs

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

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

Diversification Opportunities for First Industrial and Goldman Sachs

0.12

Correlation Coefficient

First Industrial  Goldman Sachs

Average diversification

The 3 months correlation between First and Goldman is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Industrial Realty and Goldman Sachs Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Real and First Industrial 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 First Industrial Realty 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 Real has no effect on the direction of First Industrial i.e., First Industrial and Goldman Sachs go up and down completely randomly.

Pair Corralation between First Industrial and Goldman Sachs

Allowing for the 90-day total investment horizon First Industrial is expected to generate 12.52 times less return on investment than Goldman Sachs. In addition to that, First Industrial is 1.17 times more volatile than Goldman Sachs Real. It trades about 0.02 of its total potential returns per unit of risk. Goldman Sachs Real is currently generating about 0.29 per unit of volatility. If you would invest  1,297  in Goldman Sachs Real on September 4, 2024 and sell it today you would earn a total of  71.00  from holding Goldman Sachs Real or generate 5.47% return on investment over 90 days.

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

First Industrial Realty  vs.  Goldman Sachs Real

First Industrial Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Industrial Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, First Industrial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Goldman Sachs Real

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Real are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Industrial and Goldman Sachs

The main advantage of trading using opposite First Industrial and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Industrial 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 First Industrial Realty and Goldman Sachs Real 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.