Correlation Between Goldman Sachs and Carillon Reams

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

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

Diversification Opportunities for Goldman Sachs and Carillon Reams

0.95

Correlation Coefficient

Goldman Sachs  Carillon Reams

Almost no diversification

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

Pair Corralation between Goldman Sachs and Carillon Reams

Assuming the 90 days horizon Goldman Sachs Government is expected to generate 0.9 times more return on investment than Carillon Reams. However, Goldman Sachs Government is 1.11 times less risky than Carillon Reams. It trades about 0.02 of its potential returns per unit of risk. Carillon Reams Core is currently generating about 0.01 per unit of risk. If you would invest  1,247  in Goldman Sachs Government on October 4, 2024 and sell it today you would earn a total of  29.00  from holding Goldman Sachs Government or generate 2.33% return on investment over 90 days.

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

Goldman Sachs Government  vs.  Carillon Reams Core

Goldman Sachs Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Government has generated negative risk-adjusted returns adding no value to fund investors. 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.

Carillon Reams Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carillon Reams Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Carillon Reams 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 Carillon Reams

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

The idea behind Goldman Sachs Government and Carillon Reams Core 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.