Correlation Between Goldman Sachs and Short Precious

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

Diversification Opportunities for Goldman Sachs and Short Precious

0.43

Correlation Coefficient

Goldman Sachs  Short Precious

Very weak diversification

The 3 months correlation between GOLDMAN and Short is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Short Precious go up and down completely randomly.

Pair Corralation between Goldman Sachs and Short Precious

Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 0.93 times more return on investment than Short Precious. However, Goldman Sachs Technology is 1.07 times less risky than Short Precious. It trades about -0.08 of its potential returns per unit of risk. Short Precious Metals is currently generating about -0.28 per unit of risk. If you would invest  2,823  in Goldman Sachs Technology on December 29, 2024 and sell it today you would lose (253.00) from holding Goldman Sachs Technology or give up 8.96% of portfolio value over 90 days.

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

Goldman Sachs Technology  vs.  Short Precious Metals

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 unfluctuating 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.

Short Precious Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Short Precious Metals has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Goldman Sachs and Short Precious

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

The idea behind Goldman Sachs Technology and Short Precious Metals 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.