Correlation Between Goldman Sachs and Eaton Vance

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

By analyzing existing cross correlation between Goldman Sachs Small and Eaton Vance Large Cap, you can compare the effects of market volatilities on Goldman Sachs and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Eaton Vance.

Diversification Opportunities for Goldman Sachs and Eaton Vance

0.77

Correlation Coefficient

Goldman Sachs  Eaton Vance

Poor diversification

The 3 months correlation between Goldman and Eaton is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Small and Eaton Vance Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Large 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 Small are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Large has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Eaton Vance go up and down completely randomly.

Pair Corralation between Goldman Sachs and Eaton Vance

Assuming the 90 days horizon Goldman Sachs Small is expected to under-perform the Eaton Vance. In addition to that, Goldman Sachs is 1.49 times more volatile than Eaton Vance Large Cap. It trades about -0.06 of its total potential returns per unit of risk. Eaton Vance Large Cap is currently generating about 0.0 per unit of volatility. If you would invest  2,570  in Eaton Vance Large Cap on December 26, 2024 and sell it today you would lose (1.00) from holding Eaton Vance Large Cap or give up 0.04% of portfolio value over 90 days.

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

Goldman Sachs Small  vs.  Eaton Vance Large Cap

Goldman Sachs Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eaton Vance Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eaton Vance Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Eaton Vance 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 Eaton Vance

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

The idea behind Goldman Sachs Small and Eaton Vance Large Cap 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.