Correlation Between Goldman Sachs and Lebenthal Lisanti

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

Diversification Opportunities for Goldman Sachs and Lebenthal Lisanti

0.86

Correlation Coefficient

Goldman Sachs  Lebenthal Lisanti

Very poor diversification

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

Pair Corralation between Goldman Sachs and Lebenthal Lisanti

Assuming the 90 days horizon Goldman Sachs Tax Managed is expected to generate 0.63 times more return on investment than Lebenthal Lisanti. However, Goldman Sachs Tax Managed is 1.59 times less risky than Lebenthal Lisanti. It trades about -0.1 of its potential returns per unit of risk. Lebenthal Lisanti Small is currently generating about -0.19 per unit of risk. If you would invest  4,713  in Goldman Sachs Tax Managed on December 22, 2024 and sell it today you would lose (309.00) from holding Goldman Sachs Tax Managed or give up 6.56% of portfolio value over 90 days.

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

Goldman Sachs Tax Managed  vs.  Lebenthal Lisanti Small

Goldman Sachs Tax

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Tax Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest abnormal 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.

Lebenthal Lisanti Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lebenthal Lisanti Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Goldman Sachs and Lebenthal Lisanti

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

The idea behind Goldman Sachs Tax Managed and Lebenthal Lisanti Small 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.