Correlation Between Goldman Sachs and Clearbridge Small

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

Diversification Opportunities for Goldman Sachs and Clearbridge Small

-0.78

Correlation Coefficient

Goldman Sachs  Clearbridge Small

Pay attention - limited upside

The 3 months correlation between Goldman and Clearbridge is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap 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 Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Clearbridge Small go up and down completely randomly.

Pair Corralation between Goldman Sachs and Clearbridge Small

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Clearbridge Small. In addition to that, Goldman Sachs is 1.06 times more volatile than Clearbridge Small Cap. It trades about -0.13 of its total potential returns per unit of risk. Clearbridge Small Cap is currently generating about 0.19 per unit of volatility. If you would invest  6,382  in Clearbridge Small Cap on September 5, 2024 and sell it today you would earn a total of  858.00  from holding Clearbridge Small Cap or generate 13.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Goldman Sachs Clean  vs.  Clearbridge Small Cap

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 latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Clearbridge Small Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Clearbridge Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Clearbridge Small

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

The idea behind Goldman Sachs Clean and Clearbridge Small Cap 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.