Correlation Between Goldman Sachs and Voya Midcap

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

Diversification Opportunities for Goldman Sachs and Voya Midcap

0.28

Correlation Coefficient

Goldman Sachs  Voya Midcap

Modest diversification

The 3 months correlation between Goldman and Voya is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Voya Midcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Midcap Opportunities 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 Voya Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Midcap Opportunities has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Voya Midcap go up and down completely randomly.

Pair Corralation between Goldman Sachs and Voya Midcap

Assuming the 90 days horizon Goldman Sachs is expected to generate 4.51 times less return on investment than Voya Midcap. But when comparing it to its historical volatility, Goldman Sachs Real is 1.08 times less risky than Voya Midcap. It trades about 0.08 of its potential returns per unit of risk. Voya Midcap Opportunities is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  2,477  in Voya Midcap Opportunities on September 5, 2024 and sell it today you would earn a total of  550.00  from holding Voya Midcap Opportunities or generate 22.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Goldman Sachs Real  vs.  Voya Midcap Opportunities

Goldman Sachs Real

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Real are ranked lower than 6 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Voya Midcap Opportunities

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Midcap Opportunities are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Voya Midcap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Voya Midcap

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

The idea behind Goldman Sachs Real and Voya Midcap Opportunities 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.