Correlation Between Goldman Sachs and IShares MSCI

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

By analyzing existing cross correlation between Goldman Sachs Future and iShares MSCI China, you can compare the effects of market volatilities on Goldman Sachs and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and IShares MSCI.

Diversification Opportunities for Goldman Sachs and IShares MSCI

-0.48

Correlation Coefficient

Goldman Sachs  IShares MSCI

Very good diversification

The 3 months correlation between Goldman and IShares is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China 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 Future are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares MSCI go up and down completely randomly.

Pair Corralation between Goldman Sachs and IShares MSCI

Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Future is 5.33 times less risky than IShares MSCI. The etf trades about -0.19 of its potential returns per unit of risk. The iShares MSCI China is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,394  in iShares MSCI China on September 14, 2024 and sell it today you would earn a total of  552.00  from holding iShares MSCI China or generate 23.06% return on investment over 90 days.

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

Goldman Sachs Future  vs.  iShares MSCI China

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

iShares MSCI China

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, IShares MSCI sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and IShares MSCI

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

The idea behind Goldman Sachs Future and iShares MSCI China 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.