Correlation Between Goldman Sachs and Intermediate Term

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

By analyzing existing cross correlation between Goldman Sachs Technology and Intermediate Term Tax Free Bond, you can compare the effects of market volatilities on Goldman Sachs and Intermediate Term 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 Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Intermediate Term.

Diversification Opportunities for Goldman Sachs and Intermediate Term

-0.06

Correlation Coefficient

Goldman Sachs  Intermediate Term

Good diversification

The 3 months correlation between Goldman and Intermediate is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Intermediate Term Tax Free Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Tax 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 Technology are associated (or correlated) with Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Tax has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Intermediate Term go up and down completely randomly.

Pair Corralation between Goldman Sachs and Intermediate Term

Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 5.91 times more return on investment than Intermediate Term. However, Goldman Sachs is 5.91 times more volatile than Intermediate Term Tax Free Bond. It trades about 0.15 of its potential returns per unit of risk. Intermediate Term Tax Free Bond is currently generating about -0.03 per unit of risk. If you would invest  3,207  in Goldman Sachs Technology on September 16, 2024 and sell it today you would earn a total of  391.00  from holding Goldman Sachs Technology or generate 12.19% return on investment over 90 days.

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

Goldman Sachs Technology  vs.  Intermediate Term Tax Free Bon

Goldman Sachs Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intermediate Term Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Term Tax Free Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Intermediate Term 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 Intermediate Term

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

The idea behind Goldman Sachs Technology and Intermediate Term Tax Free Bond 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.