Correlation Between Goldman Sachs and Ishares Tips

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

Diversification Opportunities for Goldman Sachs and Ishares Tips

0.66

Correlation Coefficient

Goldman Sachs  Ishares Tips

Poor diversification

The 3 months correlation between Goldman and Ishares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Ishares Tips Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Tips Bond 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 Ishares Tips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Tips Bond has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Ishares Tips go up and down completely randomly.

Pair Corralation between Goldman Sachs and Ishares Tips

Assuming the 90 days horizon Goldman Sachs Real is expected to generate 3.66 times more return on investment than Ishares Tips. However, Goldman Sachs is 3.66 times more volatile than Ishares Tips Bond. It trades about 0.05 of its potential returns per unit of risk. Ishares Tips Bond is currently generating about 0.07 per unit of risk. If you would invest  1,042  in Goldman Sachs Real on October 6, 2024 and sell it today you would earn a total of  160.00  from holding Goldman Sachs Real or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.68%
Values	Daily Returns

Goldman Sachs Real  vs.  Ishares Tips Bond

Goldman Sachs Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak 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.

Ishares Tips Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ishares Tips Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ishares Tips 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 Ishares Tips

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

The idea behind Goldman Sachs Real and Ishares Tips Bond 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.