Correlation Between Goldman Sachs and Strategic Alternatives

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

Diversification Opportunities for Goldman Sachs and Strategic Alternatives

0.14

Correlation Coefficient

Goldman Sachs  Strategic Alternatives

Average diversification

The 3 months correlation between Goldman and Strategic is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Strategic Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Alternatives 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 Strategic Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Alternatives has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Strategic Alternatives go up and down completely randomly.

Pair Corralation between Goldman Sachs and Strategic Alternatives

Assuming the 90 days horizon Goldman Sachs Clean is expected to generate 5.97 times more return on investment than Strategic Alternatives. However, Goldman Sachs is 5.97 times more volatile than Strategic Alternatives Fund. It trades about 0.08 of its potential returns per unit of risk. Strategic Alternatives Fund is currently generating about 0.17 per unit of risk. If you would invest  816.00  in Goldman Sachs Clean on December 29, 2024 and sell it today you would earn a total of  39.00  from holding Goldman Sachs Clean or generate 4.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Goldman Sachs Clean  vs.  Strategic Alternatives Fund

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 fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Strategic Alternatives

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Alternatives Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic Alternatives 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 Strategic Alternatives

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

The idea behind Goldman Sachs Clean and Strategic Alternatives 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.