Correlation Between Goldman Sachs and The Brown

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

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

Diversification Opportunities for Goldman Sachs and The Brown

-0.08

Correlation Coefficient

Goldman Sachs  The Brown

Good diversification

The 3 months correlation between Goldman and The is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs International and The Brown Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Capital 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 International are associated (or correlated) with The Brown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Capital has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and The Brown go up and down completely randomly.

Pair Corralation between Goldman Sachs and The Brown

Assuming the 90 days horizon Goldman Sachs International is expected to generate 0.16 times more return on investment than The Brown. However, Goldman Sachs International is 6.41 times less risky than The Brown. It trades about 0.06 of its potential returns per unit of risk. The Brown Capital is currently generating about -0.15 per unit of risk. If you would invest  1,260  in Goldman Sachs International on December 2, 2024 and sell it today you would earn a total of  34.00  from holding Goldman Sachs International or generate 2.7% return on investment over 90 days.

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

Goldman Sachs International  vs.  The Brown Capital

Goldman Sachs Intern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs International are ranked lower than 4 (%) 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.

Brown Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Brown Capital 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 basic 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 The Brown

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

The idea behind Goldman Sachs International and The Brown Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.