Correlation Between Goldman Sachs and Kinetics Global

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

Diversification Opportunities for Goldman Sachs and Kinetics Global

0.9

Correlation Coefficient

Goldman Sachs  Kinetics Global

Almost no diversification

The 3 months correlation between Goldman and Kinetics is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global 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 Kinetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Global has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Kinetics Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Kinetics Global

Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 0.88 times more return on investment than Kinetics Global. However, Goldman Sachs Technology is 1.14 times less risky than Kinetics Global. It trades about -0.03 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about -0.18 per unit of risk. If you would invest  3,548  in Goldman Sachs Technology on September 22, 2024 and sell it today you would lose (49.00) from holding Goldman Sachs Technology or give up 1.38% of portfolio value over 90 days.

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

Goldman Sachs Technology  vs.  Kinetics Global Fund

Goldman Sachs Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 6 (%) 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.

Kinetics Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Kinetics Global

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

The idea behind Goldman Sachs Technology and Kinetics Global Fund 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.