Correlation Between Goldman Sachs and Kinetics Small

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

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

Diversification Opportunities for Goldman Sachs and Kinetics Small

-0.02

Correlation Coefficient

Goldman Sachs  Kinetics Small

Good diversification

The 3 months correlation between GOLDMAN and Kinetics is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Managed and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap 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 Managed are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Kinetics Small go up and down completely randomly.

Pair Corralation between Goldman Sachs and Kinetics Small

Assuming the 90 days horizon Goldman Sachs Managed is expected to generate 0.26 times more return on investment than Kinetics Small. However, Goldman Sachs Managed is 3.86 times less risky than Kinetics Small. It trades about -0.13 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about -0.05 per unit of risk. If you would invest  940.00  in Goldman Sachs Managed on December 2, 2024 and sell it today you would lose (42.00) from holding Goldman Sachs Managed or give up 4.47% of portfolio value over 90 days.

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

Goldman Sachs Managed  vs.  Kinetics Small Cap

Goldman Sachs Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Managed 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.

Kinetics Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Small Cap 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.

Pair Trading with Goldman Sachs and Kinetics Small

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

The idea behind Goldman Sachs Managed and Kinetics Small Cap 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.