Correlation Between Goldman Sachs and Dreyfus High

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

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

Diversification Opportunities for Goldman Sachs and Dreyfus High

0.46

Correlation Coefficient

Goldman Sachs  Dreyfus High

Very weak diversification

The 3 months correlation between Goldman and Dreyfus is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Dreyfus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus High Yield 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 Clean are associated (or correlated) with Dreyfus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus High Yield has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Dreyfus High go up and down completely randomly.

Pair Corralation between Goldman Sachs and Dreyfus High

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Dreyfus High. In addition to that, Goldman Sachs is 2.64 times more volatile than Dreyfus High Yield. It trades about -0.19 of its total potential returns per unit of risk. Dreyfus High Yield is currently generating about -0.36 per unit of volatility. If you would invest  1,121  in Dreyfus High Yield on October 7, 2024 and sell it today you would lose (29.00) from holding Dreyfus High Yield or give up 2.59% of portfolio value over 90 days.

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

Goldman Sachs Clean  vs.  Dreyfus High Yield

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dreyfus High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Dreyfus High 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 High

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

The idea behind Goldman Sachs Clean and Dreyfus High Yield 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..