Correlation Between Goldman Sachs and Cref Money

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

By analyzing existing cross correlation between Goldman Sachs Multi Manager and Cref Money Market, you can compare the effects of market volatilities on Goldman Sachs and Cref Money 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 Cref Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Cref Money.

Diversification Opportunities for Goldman Sachs and Cref Money

0.4

Correlation Coefficient

Goldman Sachs  Cref Money

Very weak diversification

The 3 months correlation between Goldman and Cref is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Multi Manager and Cref Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Money Market 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 Multi Manager are associated (or correlated) with Cref Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Money Market has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Cref Money go up and down completely randomly.

Pair Corralation between Goldman Sachs and Cref Money

Assuming the 90 days horizon Goldman Sachs Multi Manager is expected to under-perform the Cref Money. In addition to that, Goldman Sachs is 29.47 times more volatile than Cref Money Market. It trades about -0.01 of its total potential returns per unit of risk. Cref Money Market is currently generating about 0.96 per unit of volatility. If you would invest  2,849  in Cref Money Market on October 24, 2024 and sell it today you would earn a total of  141.00  from holding Cref Money Market or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Goldman Sachs Multi Manager  vs.  Cref Money Market

Goldman Sachs Multi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Multi Manager are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cref Money Market

Risk-Adjusted Performance

84 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cref Money Market are ranked lower than 84 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Cref Money 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 Cref Money

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

The idea behind Goldman Sachs Multi Manager and Cref Money Market 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.