Correlation Between Global Arena and Goldman Sachs

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

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

Diversification Opportunities for Global Arena and Goldman Sachs

-0.43

Correlation Coefficient

Global Arena  Goldman Sachs

Very good diversification

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

Pair Corralation between Global Arena and Goldman Sachs

If you would invest  2,275  in The Goldman Sachs on August 31, 2024 and sell it today you would earn a total of  135.00  from holding The Goldman Sachs or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Global Arena Holding  vs.  The Goldman Sachs

Global Arena Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Arena Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Global Arena is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Goldman Sachs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Arena and Goldman Sachs

The main advantage of trading using opposite Global Arena and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Arena 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 Global Arena Holding and The Goldman Sachs 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.