Correlation Between AdvisorShares Gerber and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both AdvisorShares Gerber and Goldman Sachs 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 AdvisorShares Gerber and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdvisorShares Gerber Kawasaki and Goldman Sachs Future, you can compare the effects of market volatilities on AdvisorShares Gerber and Goldman Sachs 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 AdvisorShares Gerber with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Gerber and Goldman Sachs.

Diversification Opportunities for AdvisorShares Gerber and Goldman Sachs

0.83

Correlation Coefficient

AdvisorShares Gerber  Goldman Sachs

Very poor diversification

The 3 months correlation between AdvisorShares and Goldman is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Gerber Kawasaki and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and AdvisorShares Gerber 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 AdvisorShares Gerber Kawasaki are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Future has no effect on the direction of AdvisorShares Gerber i.e., AdvisorShares Gerber and Goldman Sachs go up and down completely randomly.

Pair Corralation between AdvisorShares Gerber and Goldman Sachs

Allowing for the 90-day total investment horizon AdvisorShares Gerber Kawasaki is expected to under-perform the Goldman Sachs. But the etf apears to be less risky and, when comparing its historical volatility, AdvisorShares Gerber Kawasaki is 1.15 times less risky than Goldman Sachs. The etf trades about -0.11 of its potential returns per unit of risk. The Goldman Sachs Future is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,314  in Goldman Sachs Future on December 22, 2024 and sell it today you would lose (188.00) from holding Goldman Sachs Future or give up 5.67% of portfolio value over 90 days.

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

AdvisorShares Gerber Kawasaki  vs.  Goldman Sachs Future

AdvisorShares Gerber

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvisorShares Gerber Kawasaki has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Goldman Sachs Future

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AdvisorShares Gerber and Goldman Sachs

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

The idea behind AdvisorShares Gerber Kawasaki and Goldman Sachs Future 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.