Correlation Between Glg Intl and Goldman Sachs

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

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

Diversification Opportunities for Glg Intl and Goldman Sachs

0.13

Correlation Coefficient

Glg Intl  Goldman Sachs

Average diversification

The 3 months correlation between Glg and Goldman is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Glg Intl Small and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global and Glg Intl 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 Glg Intl Small 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 Global has no effect on the direction of Glg Intl i.e., Glg Intl and Goldman Sachs go up and down completely randomly.

Pair Corralation between Glg Intl and Goldman Sachs

Assuming the 90 days horizon Glg Intl Small is expected to generate 2.3 times more return on investment than Goldman Sachs. However, Glg Intl is 2.3 times more volatile than Goldman Sachs Global. It trades about -0.14 of its potential returns per unit of risk. Goldman Sachs Global is currently generating about -0.39 per unit of risk. If you would invest  8,675  in Glg Intl Small on October 8, 2024 and sell it today you would lose (240.00) from holding Glg Intl Small or give up 2.77% of portfolio value over 90 days.

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

Glg Intl Small  vs.  Goldman Sachs Global

Glg Intl Small

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Glg Intl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Glg Intl and Goldman Sachs

The main advantage of trading using opposite Glg Intl and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glg Intl 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 Glg Intl Small and Goldman Sachs Global 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..