Correlation Between Goldman Sachs and Mainstay Cornerstone

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

Diversification Opportunities for Goldman Sachs and Mainstay Cornerstone

0.81

Correlation Coefficient

Goldman Sachs  Mainstay Cornerstone

Very poor diversification

The 3 months correlation between Goldman and Mainstay is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Mainstay Nerstone Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Nerstone Growth 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 Mainstay Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Nerstone Growth has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Mainstay Cornerstone go up and down completely randomly.

Pair Corralation between Goldman Sachs and Mainstay Cornerstone

Assuming the 90 days horizon Goldman Sachs Technology is expected to under-perform the Mainstay Cornerstone. In addition to that, Goldman Sachs is 1.13 times more volatile than Mainstay Nerstone Growth. It trades about -0.09 of its total potential returns per unit of risk. Mainstay Nerstone Growth is currently generating about -0.1 per unit of volatility. If you would invest  5,229  in Mainstay Nerstone Growth on December 23, 2024 and sell it today you would lose (458.00) from holding Mainstay Nerstone Growth or give up 8.76% of portfolio value over 90 days.

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

Goldman Sachs Technology  vs.  Mainstay Nerstone Growth

Goldman Sachs Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mainstay Nerstone Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mainstay Nerstone Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Goldman Sachs and Mainstay Cornerstone

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

The idea behind Goldman Sachs Technology and Mainstay Nerstone 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.