Correlation Between Goldman Sachs and Main Thematic

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

Diversification Opportunities for Goldman Sachs and Main Thematic

0.88

Correlation Coefficient

Goldman Sachs  Main Thematic

Very poor diversification

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

Pair Corralation between Goldman Sachs and Main Thematic

Given the investment horizon of 90 days Goldman Sachs Innovate is expected to generate 0.49 times more return on investment than Main Thematic. However, Goldman Sachs Innovate is 2.06 times less risky than Main Thematic. It trades about -0.03 of its potential returns per unit of risk. Main Thematic Innovation is currently generating about -0.07 per unit of risk. If you would invest  6,252  in Goldman Sachs Innovate on December 21, 2024 and sell it today you would lose (173.00) from holding Goldman Sachs Innovate or give up 2.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Goldman Sachs Innovate  vs.  Main Thematic Innovation

Goldman Sachs Innovate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Innovate has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Main Thematic Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Main Thematic Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Goldman Sachs and Main Thematic

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

The idea behind Goldman Sachs Innovate and Main Thematic Innovation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.