Correlation Between Goldman Sachs and Global X

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

By analyzing existing cross correlation between Goldman Sachs Innovate and Global X Thematic, you can compare the effects of market volatilities on Goldman Sachs and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Global X.

Diversification Opportunities for Goldman Sachs and Global X

0.09

Correlation Coefficient

Goldman Sachs  Global X

Significant diversification

The 3 months correlation between Goldman and Global is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Innovate and Global X Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Thematic 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 Innovate are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Thematic has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Global X go up and down completely randomly.

Pair Corralation between Goldman Sachs and Global X

Given the investment horizon of 90 days Goldman Sachs Innovate is expected to generate 0.73 times more return on investment than Global X. However, Goldman Sachs Innovate is 1.38 times less risky than Global X. It trades about 0.09 of its potential returns per unit of risk. Global X Thematic is currently generating about 0.01 per unit of risk. If you would invest  5,120  in Goldman Sachs Innovate on October 7, 2024 and sell it today you would earn a total of  1,148  from holding Goldman Sachs Innovate or generate 22.42% return on investment over 90 days.

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

Goldman Sachs Innovate  vs.  Global X Thematic

Goldman Sachs Innovate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Innovate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Global X Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Thematic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Goldman Sachs and Global X

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

The idea behind Goldman Sachs Innovate and Global X Thematic 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.