Correlation Between Goldman Sachs and Aggressive Growth

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

Diversification Opportunities for Goldman Sachs and Aggressive Growth

0.79

Correlation Coefficient

Goldman Sachs  Aggressive Growth

Poor diversification

The 3 months correlation between Goldman and Aggressive is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Aggressive Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Aggressive Growth go up and down completely randomly.

Pair Corralation between Goldman Sachs and Aggressive Growth

Assuming the 90 days horizon Goldman Sachs Technology is expected to under-perform the Aggressive Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Technology is 1.11 times less risky than Aggressive Growth. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Aggressive Growth Portfolio is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,691  in Aggressive Growth Portfolio on December 23, 2024 and sell it today you would lose (428.00) from holding Aggressive Growth Portfolio or give up 4.42% of portfolio value over 90 days.

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

Goldman Sachs Technology  vs.  Aggressive Growth Portfolio

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.

Aggressive Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aggressive Growth Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Aggressive Growth 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 Aggressive Growth

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

The idea behind Goldman Sachs Technology and Aggressive Growth Portfolio 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.