Correlation Between Goldman Sachs and Hennessy Technology

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

Diversification Opportunities for Goldman Sachs and Hennessy Technology

0.37

Correlation Coefficient

Goldman Sachs  Hennessy Technology

Weak diversification

The 3 months correlation between Goldman and Hennessy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Small and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology 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 Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Hennessy Technology go up and down completely randomly.

Pair Corralation between Goldman Sachs and Hennessy Technology

Assuming the 90 days horizon Goldman Sachs Small is expected to under-perform the Hennessy Technology. In addition to that, Goldman Sachs is 2.15 times more volatile than Hennessy Technology Fund. It trades about -0.31 of its total potential returns per unit of risk. Hennessy Technology Fund is currently generating about -0.06 per unit of volatility. If you would invest  2,383  in Hennessy Technology Fund on September 28, 2024 and sell it today you would lose (56.00) from holding Hennessy Technology Fund or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Goldman Sachs Small  vs.  Hennessy Technology Fund

Goldman Sachs Small

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Hennessy Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Technology Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Hennessy Technology 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 Hennessy Technology

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

The idea behind Goldman Sachs Small and Hennessy Technology Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.