Correlation Between Goldman Sachs and Guidepath Managed

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

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

Diversification Opportunities for Goldman Sachs and Guidepath Managed

0.63

Correlation Coefficient

Goldman Sachs  Guidepath Managed

Poor diversification

The 3 months correlation between Goldman and Guidepath is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures 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 Short are associated (or correlated) with Guidepath Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Guidepath Managed go up and down completely randomly.

Pair Corralation between Goldman Sachs and Guidepath Managed

Assuming the 90 days horizon Goldman Sachs Short is expected to generate 0.23 times more return on investment than Guidepath Managed. However, Goldman Sachs Short is 4.32 times less risky than Guidepath Managed. It trades about 0.24 of its potential returns per unit of risk. Guidepath Managed Futures is currently generating about -0.03 per unit of risk. If you would invest  965.00  in Goldman Sachs Short on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Goldman Sachs Short or generate 0.62% return on investment over 90 days.

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

Goldman Sachs Short  vs.  Guidepath Managed Futures

Goldman Sachs Short

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidepath Managed Futures

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Managed Futures are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Guidepath Managed 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 Guidepath Managed

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

The idea behind Goldman Sachs Short and Guidepath Managed Futures 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.