Correlation Between Goldman Sachs and First Asset

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

By analyzing existing cross correlation between Goldman Sachs ActiveBeta and First Asset Morningstar, you can compare the effects of market volatilities on Goldman Sachs and First Asset 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 First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and First Asset.

Diversification Opportunities for Goldman Sachs and First Asset

0.35

Correlation Coefficient

Goldman Sachs  First Asset

Weak diversification

The 3 months correlation between Goldman and First is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and First Asset Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Morningstar 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 ActiveBeta are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Morningstar has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and First Asset go up and down completely randomly.

Pair Corralation between Goldman Sachs and First Asset

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to generate 0.61 times more return on investment than First Asset. However, Goldman Sachs ActiveBeta is 1.63 times less risky than First Asset. It trades about 0.1 of its potential returns per unit of risk. First Asset Morningstar is currently generating about 0.02 per unit of risk. If you would invest  4,930  in Goldman Sachs ActiveBeta on December 29, 2024 and sell it today you would earn a total of  200.00  from holding Goldman Sachs ActiveBeta or generate 4.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Goldman Sachs ActiveBeta  vs.  First Asset Morningstar

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ActiveBeta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Asset Morningstar

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Asset Morningstar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, First Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and First Asset

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

The idea behind Goldman Sachs ActiveBeta and First Asset Morningstar 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.