Correlation Between Goldman Sachs and Focused International

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

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

Diversification Opportunities for Goldman Sachs and Focused International

0.76

Correlation Coefficient

Goldman Sachs  Focused International

Poor diversification

The 3 months correlation between Goldman and Focused is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Focused International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focused International 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 Real are associated (or correlated) with Focused International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focused International has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Focused International go up and down completely randomly.

Pair Corralation between Goldman Sachs and Focused International

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.62 times less return on investment than Focused International. But when comparing it to its historical volatility, Goldman Sachs Real is 1.01 times less risky than Focused International. It trades about 0.02 of its potential returns per unit of risk. Focused International Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,674  in Focused International Growth on December 23, 2024 and sell it today you would earn a total of  33.00  from holding Focused International Growth or generate 1.97% return on investment over 90 days.

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

Goldman Sachs Real  vs.  Focused International Growth

Goldman Sachs Real

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Real are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Focused International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focused International Growth are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Focused International 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 Focused International

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

The idea behind Goldman Sachs Real and Focused International Growth 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.