Correlation Between Goldman Sachs and Voya Solution

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

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

Diversification Opportunities for Goldman Sachs and Voya Solution

0.6

Correlation Coefficient

Goldman Sachs  Voya Solution

Poor diversification

The 3 months correlation between Goldman and Voya is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Government and Voya Solution Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Conser 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 Government are associated (or correlated) with Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution Conser has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Voya Solution go up and down completely randomly.

Pair Corralation between Goldman Sachs and Voya Solution

Assuming the 90 days horizon Goldman Sachs Government is expected to generate 1.17 times more return on investment than Voya Solution. However, Goldman Sachs is 1.17 times more volatile than Voya Solution Conservative. It trades about 0.14 of its potential returns per unit of risk. Voya Solution Conservative is currently generating about 0.07 per unit of risk. If you would invest  1,266  in Goldman Sachs Government on December 19, 2024 and sell it today you would earn a total of  33.00  from holding Goldman Sachs Government or generate 2.61% return on investment over 90 days.

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

Goldman Sachs Government  vs.  Voya Solution Conservative

Goldman Sachs Government

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Government are ranked lower than 11 (%) 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.

Voya Solution Conser

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Solution Conservative are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Solution 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 Voya Solution

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

The idea behind Goldman Sachs Government and Voya Solution Conservative 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.