Correlation Between Goldman Sachs and Parnassus Mid

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

Diversification Opportunities for Goldman Sachs and Parnassus Mid

-0.42

Correlation Coefficient

Goldman Sachs  Parnassus Mid

Very good diversification

The 3 months correlation between Goldman and Parnassus is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs International and Parnassus Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parnassus Mid 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 Parnassus Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parnassus Mid Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Parnassus Mid go up and down completely randomly.

Pair Corralation between Goldman Sachs and Parnassus Mid

Assuming the 90 days horizon Goldman Sachs International is expected to generate 0.86 times more return on investment than Parnassus Mid. However, Goldman Sachs International is 1.16 times less risky than Parnassus Mid. It trades about 0.0 of its potential returns per unit of risk. Parnassus Mid Cap is currently generating about 0.0 per unit of risk. If you would invest  1,352  in Goldman Sachs International on September 13, 2024 and sell it today you would lose (3.00) from holding Goldman Sachs International or give up 0.22% of portfolio value over 90 days.

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

Goldman Sachs International  vs.  Parnassus Mid 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 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.

Parnassus Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parnassus Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Parnassus Mid 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 Parnassus Mid

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

The idea behind Goldman Sachs International and Parnassus Mid 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.