Correlation Between Goldman Sachs and Virtus ETF

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

Diversification Opportunities for Goldman Sachs and Virtus ETF

0.76

Correlation Coefficient

Goldman Sachs  Virtus ETF

Poor diversification

The 3 months correlation between Goldman and Virtus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Virtus ETF go up and down completely randomly.

Pair Corralation between Goldman Sachs and Virtus ETF

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to generate 3.34 times more return on investment than Virtus ETF. However, Goldman Sachs is 3.34 times more volatile than Virtus ETF Trust. It trades about 0.05 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about 0.14 per unit of risk. If you would invest  6,001  in Goldman Sachs ActiveBeta on October 7, 2024 and sell it today you would earn a total of  976.00  from holding Goldman Sachs ActiveBeta or generate 16.26% return on investment over 90 days.

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

Goldman Sachs ActiveBeta  vs.  Virtus ETF Trust

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.

Virtus ETF Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Virtus ETF 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 Virtus ETF

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

The idea behind Goldman Sachs ActiveBeta and Virtus ETF Trust 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.