Correlation Between Goldman Sachs and Touchstone Large

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

Diversification Opportunities for Goldman Sachs and Touchstone Large

0.08

Correlation Coefficient

Goldman Sachs  Touchstone Large

Significant diversification

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

Pair Corralation between Goldman Sachs and Touchstone Large

Assuming the 90 days horizon Goldman Sachs Multi Manager is expected to under-perform the Touchstone Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Multi Manager is 1.29 times less risky than Touchstone Large. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Touchstone Large Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,562  in Touchstone Large Cap on September 27, 2024 and sell it today you would earn a total of  365.00  from holding Touchstone Large Cap or generate 23.37% return on investment over 90 days.

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

Goldman Sachs Multi Manager  vs.  Touchstone Large Cap

Goldman Sachs Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Multi Manager has generated negative risk-adjusted returns adding no value to fund investors. 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.

Touchstone Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Goldman Sachs Multi Manager and Touchstone Large 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..