Correlation Between Goldman Sachs and FT Cboe

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

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

Diversification Opportunities for Goldman Sachs and FT Cboe

0.09

Correlation Coefficient

Goldman Sachs  FT Cboe

Significant diversification

The 3 months correlation between Goldman and FNOV is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs MarketBeta and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 MarketBeta are associated (or correlated) with FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and FT Cboe go up and down completely randomly.

Pair Corralation between Goldman Sachs and FT Cboe

Given the investment horizon of 90 days Goldman Sachs MarketBeta is expected to generate 1.48 times more return on investment than FT Cboe. However, Goldman Sachs is 1.48 times more volatile than FT Cboe Vest. It trades about 0.1 of its potential returns per unit of risk. FT Cboe Vest is currently generating about -0.05 per unit of risk. If you would invest  4,380  in Goldman Sachs MarketBeta on December 19, 2024 and sell it today you would earn a total of  244.00  from holding Goldman Sachs MarketBeta or generate 5.57% return on investment over 90 days.

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

Goldman Sachs MarketBeta  vs.  FT Cboe Vest

Goldman Sachs MarketBeta

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs MarketBeta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

FT Cboe Vest

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Cboe Vest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FT Cboe is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Goldman Sachs and FT Cboe

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

The idea behind Goldman Sachs MarketBeta and FT Cboe Vest 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.