Correlation Between Goldman Sachs and Ultramid Cap

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

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

Diversification Opportunities for Goldman Sachs and Ultramid Cap

0.16

Correlation Coefficient

Goldman Sachs  Ultramid Cap

Average diversification

The 3 months correlation between Goldman and Ultramid is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs International and Ultramid Cap Profund Ultramid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultramid Cap Profund 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 International are associated (or correlated) with Ultramid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultramid Cap Profund has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Ultramid Cap go up and down completely randomly.

Pair Corralation between Goldman Sachs and Ultramid Cap

Assuming the 90 days horizon Goldman Sachs International is expected to under-perform the Ultramid Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs International is 2.09 times less risky than Ultramid Cap. The mutual fund trades about -0.26 of its potential returns per unit of risk. The Ultramid Cap Profund Ultramid Cap is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  5,780  in Ultramid Cap Profund Ultramid Cap on October 8, 2024 and sell it today you would lose (529.00) from holding Ultramid Cap Profund Ultramid Cap or give up 9.15% of portfolio value over 90 days.

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

Goldman Sachs International  vs.  Ultramid Cap Profund Ultramid

Goldman Sachs Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ultramid Cap Profund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ultramid Cap Profund Ultramid Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ultramid Cap 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 Ultramid Cap

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

The idea behind Goldman Sachs International and Ultramid Cap Profund Ultramid 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.