Correlation Between Goldman Sachs and Hartford Multifactor

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

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

Diversification Opportunities for Goldman Sachs and Hartford Multifactor

0.95

Correlation Coefficient

Goldman Sachs  Hartford Multifactor

Almost no diversification

The 3 months correlation between Goldman and Hartford is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and Hartford Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor 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 ActiveBeta are associated (or correlated) with Hartford Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Multifactor has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Goldman Sachs and Hartford Multifactor

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to under-perform the Hartford Multifactor. In addition to that, Goldman Sachs is 1.14 times more volatile than Hartford Multifactor Developed. It trades about -0.03 of its total potential returns per unit of risk. Hartford Multifactor Developed is currently generating about 0.0 per unit of volatility. If you would invest  3,000  in Hartford Multifactor Developed on September 12, 2024 and sell it today you would lose (9.00) from holding Hartford Multifactor Developed or give up 0.3% of portfolio value over 90 days.

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

Goldman Sachs ActiveBeta  vs.  Hartford Multifactor Developed

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs ActiveBeta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Hartford Multifactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Multifactor Developed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Hartford Multifactor is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Hartford Multifactor

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

The idea behind Goldman Sachs ActiveBeta and Hartford Multifactor Developed 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.