Correlation Between Goldman Sachs and Harbor International

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

Diversification Opportunities for Goldman Sachs and Harbor International

0.84

Correlation Coefficient

Goldman Sachs  Harbor International

Very poor diversification

The 3 months correlation between Goldman and Harbor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Harbor International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International 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 Harbor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor International has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Harbor International go up and down completely randomly.

Pair Corralation between Goldman Sachs and Harbor International

Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 1.36 times more return on investment than Harbor International. However, Goldman Sachs is 1.36 times more volatile than Harbor International Growth. It trades about 0.13 of its potential returns per unit of risk. Harbor International Growth is currently generating about 0.11 per unit of risk. If you would invest  2,301  in Goldman Sachs Technology on September 17, 2024 and sell it today you would earn a total of  1,297  from holding Goldman Sachs Technology or generate 56.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.0%
Values	Daily Returns

Goldman Sachs Technology  vs.  Harbor International Growth

Goldman Sachs Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 12 (%) 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.

Harbor International

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Harbor International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak technical and fundamental indicators, Harbor International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Harbor International

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

The idea behind Goldman Sachs Technology and Harbor International Growth 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.