Correlation Between Goldman Sachs and Clearbridge Appreciation

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Clearbridge Appreciation 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 Clearbridge Appreciation 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 Clearbridge Appreciation Fund, you can compare the effects of market volatilities on Goldman Sachs and Clearbridge Appreciation 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 Clearbridge Appreciation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Clearbridge Appreciation.

Diversification Opportunities for Goldman Sachs and Clearbridge Appreciation

0.82

Correlation Coefficient

Goldman Sachs  Clearbridge Appreciation

Very poor diversification

The 3 months correlation between Goldman and Clearbridge is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Global and Clearbridge Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Appreciation 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 Clearbridge Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Appreciation has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Clearbridge Appreciation go up and down completely randomly.

Pair Corralation between Goldman Sachs and Clearbridge Appreciation

Assuming the 90 days horizon Goldman Sachs Global is expected to under-perform the Clearbridge Appreciation. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Global is 1.5 times less risky than Clearbridge Appreciation. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Clearbridge Appreciation Fund is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,568  in Clearbridge Appreciation Fund on October 22, 2024 and sell it today you would lose (225.00) from holding Clearbridge Appreciation Fund or give up 6.31% of portfolio value over 90 days.

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

Goldman Sachs Global  vs.  Clearbridge Appreciation Fund

Goldman Sachs Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Clearbridge Appreciation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearbridge Appreciation Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Clearbridge Appreciation 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 Clearbridge Appreciation

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

The idea behind Goldman Sachs Global and Clearbridge Appreciation 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.