Correlation Between Goldman Sachs and IShares Core

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

Diversification Opportunities for Goldman Sachs and IShares Core

0.99

Correlation Coefficient

Goldman Sachs  IShares Core

No risk reduction

The 3 months correlation between Goldman and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares Core go up and down completely randomly.

Pair Corralation between Goldman Sachs and IShares Core

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to under-perform the IShares Core. In addition to that, Goldman Sachs is 1.27 times more volatile than iShares Core SP. It trades about -0.28 of its total potential returns per unit of risk. iShares Core SP is currently generating about -0.31 per unit of volatility. If you would invest  6,728  in iShares Core SP on September 27, 2024 and sell it today you would lose (421.00) from holding iShares Core SP or give up 6.26% 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.  iShares Core SP

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ActiveBeta are ranked lower than 2 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Core SP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Goldman Sachs and IShares Core

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

The idea behind Goldman Sachs ActiveBeta and iShares Core SP 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.