Correlation Between Goldman Sachs and Real Estate

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

By analyzing existing cross correlation between Goldman Sachs Global and Real Estate Fund, you can compare the effects of market volatilities on Goldman Sachs and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Real Estate.

Diversification Opportunities for Goldman Sachs and Real Estate

0.81

Correlation Coefficient

Goldman Sachs  Real Estate

Very poor diversification

The 3 months correlation between Goldman and Real is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Global and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund 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 Global are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Real Estate go up and down completely randomly.

Pair Corralation between Goldman Sachs and Real Estate

Assuming the 90 days horizon Goldman Sachs Global is expected to generate 0.9 times more return on investment than Real Estate. However, Goldman Sachs Global is 1.11 times less risky than Real Estate. It trades about 0.03 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.03 per unit of risk. If you would invest  946.00  in Goldman Sachs Global on December 21, 2024 and sell it today you would earn a total of  16.00  from holding Goldman Sachs Global or generate 1.69% return on investment over 90 days.

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

Goldman Sachs Global  vs.  Real Estate Fund

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 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.

Real Estate Fund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Real Estate 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 Real Estate

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

The idea behind Goldman Sachs Global and Real Estate Fund 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 Global Correlations module to find global opportunities by holding instruments from different markets.