Correlation Between Goldman Sachs and Spectrum Unconstrained

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

Diversification Opportunities for Goldman Sachs and Spectrum Unconstrained

0.37

Correlation Coefficient

Goldman Sachs  Spectrum Unconstrained

Weak diversification

The 3 months correlation between GOLDMAN and Spectrum is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Managed and Spectrum Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Unconstrained 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 Spectrum Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Unconstrained has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Spectrum Unconstrained go up and down completely randomly.

Pair Corralation between Goldman Sachs and Spectrum Unconstrained

Assuming the 90 days horizon Goldman Sachs Managed is expected to under-perform the Spectrum Unconstrained. In addition to that, Goldman Sachs is 3.48 times more volatile than Spectrum Unconstrained. It trades about -0.02 of its total potential returns per unit of risk. Spectrum Unconstrained is currently generating about 0.09 per unit of volatility. If you would invest  1,884  in Spectrum Unconstrained on September 5, 2024 and sell it today you would earn a total of  25.00  from holding Spectrum Unconstrained or generate 1.33% 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 Managed  vs.  Spectrum Unconstrained

Goldman Sachs Managed

Risk-Adjusted Performance

0 of 100

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.

Spectrum Unconstrained

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Unconstrained are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Spectrum Unconstrained 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 Spectrum Unconstrained

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

The idea behind Goldman Sachs Managed and Spectrum Unconstrained 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.