Correlation Between Goldman Sachs and Pimco Floating

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

Diversification Opportunities for Goldman Sachs and Pimco Floating

0.41

Correlation Coefficient

Goldman Sachs  Pimco Floating

Very weak diversification

The 3 months correlation between Goldman and Pimco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Pimco Floating Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Floating Income 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 Pimco Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Floating Income has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Pimco Floating go up and down completely randomly.

Pair Corralation between Goldman Sachs and Pimco Floating

Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 7.48 times more return on investment than Pimco Floating. However, Goldman Sachs is 7.48 times more volatile than Pimco Floating Income. It trades about 0.23 of its potential returns per unit of risk. Pimco Floating Income is currently generating about 0.07 per unit of risk. If you would invest  3,216  in Goldman Sachs Technology on September 13, 2024 and sell it today you would earn a total of  540.00  from holding Goldman Sachs Technology or generate 16.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Goldman Sachs Technology  vs.  Pimco Floating Income

Goldman Sachs Technology

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pimco Floating Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Floating Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pimco Floating 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 Pimco Floating

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

The idea behind Goldman Sachs Technology and Pimco Floating Income 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.