Correlation Between Goldman Sachs and IQ 50

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and IQ 50 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 IQ 50 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 IQ 50 Percent, you can compare the effects of market volatilities on Goldman Sachs and IQ 50 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 IQ 50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and IQ 50.

Diversification Opportunities for Goldman Sachs and IQ 50

0.88

Correlation Coefficient

Goldman Sachs  IQ 50

Very poor diversification

The 3 months correlation between Goldman and HFXI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Access and IQ 50 Percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ 50 Percent 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 IQ 50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ 50 Percent has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IQ 50 go up and down completely randomly.

Pair Corralation between Goldman Sachs and IQ 50

Given the investment horizon of 90 days Goldman Sachs is expected to generate 3.71 times less return on investment than IQ 50. But when comparing it to its historical volatility, Goldman Sachs Access is 2.38 times less risky than IQ 50. It trades about 0.09 of its potential returns per unit of risk. IQ 50 Percent is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,620  in IQ 50 Percent on December 27, 2024 and sell it today you would earn a total of  181.00  from holding IQ 50 Percent or generate 6.91% return on investment over 90 days.

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

Goldman Sachs Access  vs.  IQ 50 Percent

Goldman Sachs Access

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Access are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IQ 50 Percent

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IQ 50 Percent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, IQ 50 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Goldman Sachs and IQ 50

The main advantage of trading using opposite Goldman Sachs and IQ 50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, IQ 50 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 IQ 50 will offset losses from the drop in IQ 50's long position.

The idea behind Goldman Sachs Access and IQ 50 Percent 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.