Correlation Between Goldman Sachs and IShares Treasury

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

By analyzing existing cross correlation between Goldman Sachs Access and iShares Treasury Floating, you can compare the effects of market volatilities on Goldman Sachs and IShares Treasury 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 IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and IShares Treasury.

Diversification Opportunities for Goldman Sachs and IShares Treasury

0.99

Correlation Coefficient

Goldman Sachs  IShares Treasury

No risk reduction

The 3 months correlation between Goldman and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Access and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating 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 Access are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares Treasury go up and down completely randomly.

Pair Corralation between Goldman Sachs and IShares Treasury

Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.02 times less return on investment than IShares Treasury. In addition to that, Goldman Sachs is 1.16 times more volatile than iShares Treasury Floating. It trades about 0.74 of its total potential returns per unit of risk. iShares Treasury Floating is currently generating about 0.87 per unit of volatility. If you would invest  5,012  in iShares Treasury Floating on December 29, 2024 and sell it today you would earn a total of  53.00  from holding iShares Treasury Floating or generate 1.06% 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 Access  vs.  iShares Treasury Floating

Goldman Sachs Access

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Access are ranked lower than 58 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

iShares Treasury Floating

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 69 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and IShares Treasury

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

The idea behind Goldman Sachs Access and iShares Treasury Floating 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.