Correlation Between Goldman Sachs and Alerian Energy

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

Diversification Opportunities for Goldman Sachs and Alerian Energy

-0.49

Correlation Coefficient

Goldman Sachs  Alerian Energy

Very good diversification

The 3 months correlation between Goldman and Alerian is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Alerian Energy Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerian Energy Infra 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 Alerian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerian Energy Infra has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Alerian Energy go up and down completely randomly.

Pair Corralation between Goldman Sachs and Alerian Energy

Given the investment horizon of 90 days Goldman Sachs is expected to generate 4.98 times less return on investment than Alerian Energy. But when comparing it to its historical volatility, Goldman Sachs Future is 1.21 times less risky than Alerian Energy. It trades about 0.04 of its potential returns per unit of risk. Alerian Energy Infrastructure is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,522  in Alerian Energy Infrastructure on September 28, 2024 and sell it today you would earn a total of  563.00  from holding Alerian Energy Infrastructure or generate 22.32% 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.  Alerian Energy Infrastructure

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 fragile 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.

Alerian Energy Infra

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alerian Energy Infrastructure are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Alerian Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Alerian Energy

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

The idea behind Goldman Sachs Future and Alerian Energy Infrastructure 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.