Correlation Between The Gabelli and Goldman Sachs

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

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

Diversification Opportunities for The Gabelli and Goldman Sachs

-0.27

Correlation Coefficient

The Gabelli  Goldman Sachs

Very good diversification

The 3 months correlation between The and Goldman is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Equity and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and The Gabelli 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 The Gabelli Equity 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 Clean has no effect on the direction of The Gabelli i.e., The Gabelli and Goldman Sachs go up and down completely randomly.

Pair Corralation between The Gabelli and Goldman Sachs

Assuming the 90 days horizon The Gabelli is expected to generate 23.41 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, The Gabelli Equity is 1.15 times less risky than Goldman Sachs. It trades about 0.0 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  812.00  in Goldman Sachs Clean on December 29, 2024 and sell it today you would earn a total of  38.00  from holding Goldman Sachs Clean or generate 4.68% return on investment over 90 days.

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

The Gabelli Equity  vs.  Goldman Sachs Clean

Gabelli Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, The Gabelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Clean

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Clean are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Gabelli and Goldman Sachs

The main advantage of trading using opposite The Gabelli and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gabelli 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 The Gabelli Equity and Goldman Sachs Clean 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.