Correlation Between Goldman Sachs and ProShares

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

Diversification Opportunities for Goldman Sachs and ProShares

-0.41

Correlation Coefficient

Goldman Sachs  ProShares

Very good diversification

The 3 months correlation between Goldman and ProShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Technology has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and ProShares go up and down completely randomly.

Pair Corralation between Goldman Sachs and ProShares

Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the ProShares. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Future is 1.13 times less risky than ProShares. The etf trades about -0.13 of its potential returns per unit of risk. The ProShares SP Technology is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7,592  in ProShares SP Technology on September 18, 2024 and sell it today you would earn a total of  245.00  from holding ProShares SP Technology or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Goldman Sachs Future  vs.  ProShares SP Technology

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.

ProShares SP Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, ProShares is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Goldman Sachs and ProShares

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

The idea behind Goldman Sachs Future and ProShares SP Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.