Correlation Between Goldman Sachs and Dreyfus Short

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

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

Diversification Opportunities for Goldman Sachs and Dreyfus Short

1.0

Correlation Coefficient

Goldman Sachs  Dreyfus Short

No risk reduction

The 3 months correlation between Goldman and Dreyfus is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Dreyfus Short Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Short Interm and Goldman Sachs 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 Goldman Sachs Short are associated (or correlated) with Dreyfus Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Short Interm has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Dreyfus Short go up and down completely randomly.

Pair Corralation between Goldman Sachs and Dreyfus Short

Assuming the 90 days horizon Goldman Sachs Short is expected to generate 1.19 times more return on investment than Dreyfus Short. However, Goldman Sachs is 1.19 times more volatile than Dreyfus Short Intermediate. It trades about 0.22 of its potential returns per unit of risk. Dreyfus Short Intermediate is currently generating about 0.25 per unit of risk. If you would invest  1,025  in Goldman Sachs Short on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Goldman Sachs Short or generate 1.07% return on investment over 90 days.

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

Goldman Sachs Short  vs.  Dreyfus Short Intermediate

Goldman Sachs Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 16 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Short Interm

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Short Intermediate are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Dreyfus Short

The main advantage of trading using opposite Goldman Sachs and Dreyfus Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Dreyfus Short 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 Dreyfus Short will offset losses from the drop in Dreyfus Short's long position.

The idea behind Goldman Sachs Short and Dreyfus Short Intermediate 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.