Correlation Between Goldman Sachs and KBUY

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

Diversification Opportunities for Goldman Sachs and KBUY

0.63

Correlation Coefficient

Goldman Sachs  KBUY

Poor diversification

The 3 months correlation between Goldman and KBUY is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and KBUY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBUY 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 KBUY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBUY has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and KBUY go up and down completely randomly.

Pair Corralation between Goldman Sachs and KBUY

Given the investment horizon of 90 days Goldman Sachs Future is expected to generate 0.7 times more return on investment than KBUY. However, Goldman Sachs Future is 1.42 times less risky than KBUY. It trades about 0.02 of its potential returns per unit of risk. KBUY is currently generating about -0.04 per unit of risk. If you would invest  3,113  in Goldman Sachs Future on September 21, 2024 and sell it today you would earn a total of  222.00  from holding Goldman Sachs Future or generate 7.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.28%
Values	Daily Returns

Goldman Sachs Future  vs.  KBUY

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.

KBUY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBUY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, KBUY 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 KBUY

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

The idea behind Goldman Sachs Future and KBUY 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.