Correlation Between Goldman Sachs and Transamerica Floating

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

Diversification Opportunities for Goldman Sachs and Transamerica Floating

-0.07

Correlation Coefficient

Goldman Sachs  Transamerica Floating

Good diversification

The 3 months correlation between Goldman and Transamerica is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Transamerica Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Floating 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 Transamerica Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Floating has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Transamerica Floating go up and down completely randomly.

Pair Corralation between Goldman Sachs and Transamerica Floating

Assuming the 90 days horizon Goldman Sachs Real is expected to under-perform the Transamerica Floating. In addition to that, Goldman Sachs is 8.88 times more volatile than Transamerica Floating Rate. It trades about -0.05 of its total potential returns per unit of risk. Transamerica Floating Rate is currently generating about 0.11 per unit of volatility. If you would invest  890.00  in Transamerica Floating Rate on December 4, 2024 and sell it today you would earn a total of  8.00  from holding Transamerica Floating Rate or generate 0.9% return on investment over 90 days.

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

Goldman Sachs Real  vs.  Transamerica Floating Rate

Goldman Sachs Real

Risk-Adjusted Performance

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 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.

Transamerica Floating

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Floating Rate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Transamerica Floating 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 Transamerica Floating

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

The idea behind Goldman Sachs Real and Transamerica Floating Rate 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.