Correlation Between Goldman Sachs and SPDR DoubleLine

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

Diversification Opportunities for Goldman Sachs and SPDR DoubleLine

0.05

Correlation Coefficient

Goldman Sachs  SPDR DoubleLine

Significant diversification

The 3 months correlation between Goldman and SPDR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and SPDR DoubleLine Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR DoubleLine Emerging 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 SPDR DoubleLine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR DoubleLine Emerging has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and SPDR DoubleLine go up and down completely randomly.

Pair Corralation between Goldman Sachs and SPDR DoubleLine

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to under-perform the SPDR DoubleLine. In addition to that, Goldman Sachs is 7.13 times more volatile than SPDR DoubleLine Emerging. It trades about -0.12 of its total potential returns per unit of risk. SPDR DoubleLine Emerging is currently generating about 0.0 per unit of volatility. If you would invest  4,223  in SPDR DoubleLine Emerging on October 7, 2024 and sell it today you would lose (1.00) from holding SPDR DoubleLine Emerging or give up 0.02% of portfolio value over 90 days.

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

Goldman Sachs ActiveBeta  vs.  SPDR DoubleLine Emerging

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ActiveBeta are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR DoubleLine Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR DoubleLine Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Goldman Sachs and SPDR DoubleLine

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

The idea behind Goldman Sachs ActiveBeta and SPDR DoubleLine Emerging 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.