Correlation Between Goldman Sachs and Multimedia Portfolio

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Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Multimedia Portfolio 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 Multimedia Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Tax Managed and Multimedia Portfolio Multimedia, you can compare the effects of market volatilities on Goldman Sachs and Multimedia Portfolio 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 Multimedia Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Multimedia Portfolio.

Diversification Opportunities for Goldman Sachs and Multimedia Portfolio

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Goldman and Multimedia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Tax Managed and Multimedia Portfolio Multimedi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimedia Portfolio 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 Tax Managed are associated (or correlated) with Multimedia Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimedia Portfolio has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Multimedia Portfolio go up and down completely randomly.

Pair Corralation between Goldman Sachs and Multimedia Portfolio

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.16 times less return on investment than Multimedia Portfolio. But when comparing it to its historical volatility, Goldman Sachs Tax Managed is 1.27 times less risky than Multimedia Portfolio. It trades about 0.14 of its potential returns per unit of risk. Multimedia Portfolio Multimedia is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,573  in Multimedia Portfolio Multimedia on September 24, 2024 and sell it today you would earn a total of  3,708  from holding Multimedia Portfolio Multimedia or generate 48.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Goldman Sachs Tax Managed  vs.  Multimedia Portfolio Multimedi

 Performance 
       Timeline  
Goldman Sachs Tax 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Tax Managed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.
Multimedia Portfolio 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs and Multimedia Portfolio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goldman Sachs and Multimedia Portfolio

The main advantage of trading using opposite Goldman Sachs and Multimedia Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Multimedia Portfolio 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 Multimedia Portfolio will offset losses from the drop in Multimedia Portfolio's long position.
The idea behind Goldman Sachs Tax Managed and Multimedia Portfolio Multimedia 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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