Correlation Between Deutsche Gnma and Goldman Sachs

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

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

Diversification Opportunities for Deutsche Gnma and Goldman Sachs

0.21

Correlation Coefficient

Deutsche Gnma  Goldman Sachs

Modest diversification

The 3 months correlation between Deutsche and GOLDMAN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Gnma Fund and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Deutsche Gnma 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 Deutsche Gnma Fund 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 Short has no effect on the direction of Deutsche Gnma i.e., Deutsche Gnma and Goldman Sachs go up and down completely randomly.

Pair Corralation between Deutsche Gnma and Goldman Sachs

Assuming the 90 days horizon Deutsche Gnma Fund is expected to under-perform the Goldman Sachs. In addition to that, Deutsche Gnma is 3.23 times more volatile than Goldman Sachs Short. It trades about -0.12 of its total potential returns per unit of risk. Goldman Sachs Short is currently generating about -0.04 per unit of volatility. If you would invest  1,036  in Goldman Sachs Short on October 9, 2024 and sell it today you would lose (3.00) from holding Goldman Sachs Short or give up 0.29% of portfolio value over 90 days.

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

Deutsche Gnma Fund  vs.  Goldman Sachs Short

Deutsche Gnma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Goldman Sachs Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Deutsche Gnma and Goldman Sachs

The main advantage of trading using opposite Deutsche Gnma and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Gnma 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 Deutsche Gnma Fund and Goldman Sachs Short 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.