Correlation Between Goldman Sachs and Gladstone Investment

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

Diversification Opportunities for Goldman Sachs and Gladstone Investment

-0.55

Correlation Coefficient

Goldman Sachs  Gladstone Investment

Excellent diversification

The 3 months correlation between Goldman and Gladstone is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Gladstone Investment go up and down completely randomly.

Pair Corralation between Goldman Sachs and Gladstone Investment

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.47 times more return on investment than Gladstone Investment. However, Goldman Sachs is 1.47 times more volatile than Gladstone Investment. It trades about 0.08 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.04 per unit of risk. If you would invest  32,496  in Goldman Sachs Group on September 20, 2024 and sell it today you would earn a total of  23,470  from holding Goldman Sachs Group or generate 72.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Goldman Sachs Group  vs.  Gladstone Investment

Goldman Sachs Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Gladstone Investment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Gladstone Investment

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

The idea behind Goldman Sachs Group and Gladstone Investment 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.