Correlation Between Goldman Sachs and Nuveen Small

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

Diversification Opportunities for Goldman Sachs and Nuveen Small

-0.39

Correlation Coefficient

Goldman Sachs  Nuveen Small

Very good diversification

The 3 months correlation between Goldman and Nuveen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs International and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap 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 Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Nuveen Small go up and down completely randomly.

Pair Corralation between Goldman Sachs and Nuveen Small

Assuming the 90 days horizon Goldman Sachs International is expected to under-perform the Nuveen Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs International is 1.47 times less risky than Nuveen Small. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Nuveen Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,259  in Nuveen Small Cap on September 27, 2024 and sell it today you would earn a total of  126.00  from holding Nuveen Small Cap or generate 3.87% 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.  Nuveen Small Cap

Goldman Sachs Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs International 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nuveen Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Small 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 Nuveen Small

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

The idea behind Goldman Sachs International and Nuveen Small Cap 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.