Correlation Between Goldman Sachs and Templeton Global

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

Diversification Opportunities for Goldman Sachs and Templeton Global

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Goldman and Templeton is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Templeton Global Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Smaller 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Smaller has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Templeton Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Templeton Global

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Templeton Global. In addition to that, Goldman Sachs is 1.33 times more volatile than Templeton Global Smaller. It trades about -0.29 of its total potential returns per unit of risk. Templeton Global Smaller is currently generating about -0.13 per unit of volatility. If you would invest  1,016  in Templeton Global Smaller on September 25, 2024 and sell it today you would lose (71.00) from holding Templeton Global Smaller or give up 6.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Goldman Sachs Clean  vs.  Templeton Global Smaller

 Performance 
       Timeline  
Goldman Sachs Clean 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 fragile performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
Templeton Global Smaller 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Templeton Global Smaller has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Goldman Sachs and Templeton Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goldman Sachs and Templeton Global

The main advantage of trading using opposite Goldman Sachs and Templeton Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Templeton Global 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 Templeton Global will offset losses from the drop in Templeton Global's long position.
The idea behind Goldman Sachs Clean and Templeton Global Smaller 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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