Correlation Between Goldman Sachs and Victory Strategic

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

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

Diversification Opportunities for Goldman Sachs and Victory Strategic

0.5

Correlation Coefficient

Goldman Sachs  Victory Strategic

Very weak diversification

The 3 months correlation between Goldman and Victory is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and Victory Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Strategic 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 Large are associated (or correlated) with Victory Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Strategic has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Victory Strategic go up and down completely randomly.

Pair Corralation between Goldman Sachs and Victory Strategic

Assuming the 90 days horizon Goldman Sachs Large is expected to under-perform the Victory Strategic. In addition to that, Goldman Sachs is 2.55 times more volatile than Victory Strategic Allocation. It trades about -0.11 of its total potential returns per unit of risk. Victory Strategic Allocation is currently generating about -0.02 per unit of volatility. If you would invest  1,900  in Victory Strategic Allocation on December 30, 2024 and sell it today you would lose (12.00) from holding Victory Strategic Allocation or give up 0.63% of portfolio value over 90 days.

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

Goldman Sachs Large  vs.  Victory Strategic Allocation

Goldman Sachs Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Large 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.

Victory Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Strategic Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Victory Strategic 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 Victory Strategic

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

The idea behind Goldman Sachs Large and Victory Strategic Allocation 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.