Correlation Between Goldman Sachs and Abrdn Emerging

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

By analyzing existing cross correlation between Goldman Sachs Group and Abrdn Emerging Markets, you can compare the effects of market volatilities on Goldman Sachs and Abrdn Emerging 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 Abrdn Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Abrdn Emerging.

Diversification Opportunities for Goldman Sachs and Abrdn Emerging

-0.81

Correlation Coefficient

Goldman Sachs  Abrdn Emerging

Pay attention - limited upside

The 3 months correlation between Goldman and Abrdn is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Abrdn Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Emerging Markets 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 Group are associated (or correlated) with Abrdn Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Emerging Markets has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Abrdn Emerging go up and down completely randomly.

Pair Corralation between Goldman Sachs and Abrdn Emerging

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.86 times more return on investment than Abrdn Emerging. However, Goldman Sachs is 1.86 times more volatile than Abrdn Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Abrdn Emerging Markets is currently generating about -0.04 per unit of risk. If you would invest  52,436  in Goldman Sachs Group on October 6, 2024 and sell it today you would earn a total of  5,577  from holding Goldman Sachs Group or generate 10.64% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Abrdn Emerging Markets

Goldman Sachs Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Abrdn Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abrdn Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. Despite latest fragile performance, the Fund's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Pair Trading with Goldman Sachs and Abrdn Emerging

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

The idea behind Goldman Sachs Group and Abrdn Emerging Markets 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.