Correlation Between Goldman Sachs and Hennessy Technology

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

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

Diversification Opportunities for Goldman Sachs and Hennessy Technology

-0.42

Correlation Coefficient

Goldman Sachs  Hennessy Technology

Very good diversification

The 3 months correlation between Goldman and Hennessy is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy 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 Inflation are associated (or correlated) with Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Hennessy Technology go up and down completely randomly.

Pair Corralation between Goldman Sachs and Hennessy Technology

Assuming the 90 days horizon Goldman Sachs Inflation is expected to generate 0.19 times more return on investment than Hennessy Technology. However, Goldman Sachs Inflation is 5.34 times less risky than Hennessy Technology. It trades about 0.22 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about -0.07 per unit of risk. If you would invest  921.00  in Goldman Sachs Inflation on December 21, 2024 and sell it today you would earn a total of  32.00  from holding Goldman Sachs Inflation or generate 3.47% 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 Inflation  vs.  Hennessy Technology Fund

Goldman Sachs Inflation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Inflation are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hennessy Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hennessy Technology Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Hennessy Technology 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 Hennessy Technology

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

The idea behind Goldman Sachs Inflation and Hennessy Technology Fund 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.