Correlation Between Goldman Sachs and FlexShares High

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

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

Diversification Opportunities for Goldman Sachs and FlexShares High

0.87

Correlation Coefficient

Goldman Sachs  FlexShares High

Very poor diversification

The 3 months correlation between Goldman and FlexShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Access and FlexShares High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares High Yield 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 Access are associated (or correlated) with FlexShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares High Yield has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and FlexShares High go up and down completely randomly.

Pair Corralation between Goldman Sachs and FlexShares High

Given the investment horizon of 90 days Goldman Sachs Access is expected to under-perform the FlexShares High. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Access is 1.1 times less risky than FlexShares High. The etf trades about -0.13 of its potential returns per unit of risk. The FlexShares High Yield is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,088  in FlexShares High Yield on September 28, 2024 and sell it today you would lose (24.00) from holding FlexShares High Yield or give up 0.59% of portfolio value over 90 days.

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

Goldman Sachs Access  vs.  FlexShares High Yield

Goldman Sachs Access

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Access has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat 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.

FlexShares High Yield

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days FlexShares High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, FlexShares High is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Goldman Sachs and FlexShares High

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

The idea behind Goldman Sachs Access and FlexShares High Yield 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.