Correlation Between Goldman Sachs and Astor Longshort

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

By analyzing existing cross correlation between Goldman Sachs Short Term and Astor Longshort Fund, you can compare the effects of market volatilities on Goldman Sachs and Astor Longshort 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 Astor Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Astor Longshort.

Diversification Opportunities for Goldman Sachs and Astor Longshort

-0.39

Correlation Coefficient

Goldman Sachs  Astor Longshort

Very good diversification

The 3 months correlation between Goldman and Astor is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short Term and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Longshort 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 Short Term are associated (or correlated) with Astor Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Longshort has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Astor Longshort go up and down completely randomly.

Pair Corralation between Goldman Sachs and Astor Longshort

Assuming the 90 days horizon Goldman Sachs Short Term is expected to generate 0.17 times more return on investment than Astor Longshort. However, Goldman Sachs Short Term is 5.94 times less risky than Astor Longshort. It trades about 0.23 of its potential returns per unit of risk. Astor Longshort Fund is currently generating about -0.05 per unit of risk. If you would invest  998.00  in Goldman Sachs Short Term on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Goldman Sachs Short Term or generate 1.2% return on investment over 90 days.

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

Goldman Sachs Short Term  vs.  Astor Longshort Fund

Goldman Sachs Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short Term are ranked lower than 18 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Astor Longshort

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Goldman Sachs Short Term and Astor Longshort Fund 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.