Correlation Between Goldman Sachs and Technology Ultrasector

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

Diversification Opportunities for Goldman Sachs and Technology Ultrasector

0.0

Correlation Coefficient

Goldman Sachs  Technology Ultrasector

Pay attention - limited upside

The 3 months correlation between Goldman and Technology is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Small and Technology Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Ultrasector 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 Technology Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Ultrasector has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Technology Ultrasector go up and down completely randomly.

Pair Corralation between Goldman Sachs and Technology Ultrasector

Assuming the 90 days horizon Goldman Sachs Small is expected to under-perform the Technology Ultrasector. In addition to that, Goldman Sachs is 1.34 times more volatile than Technology Ultrasector Profund. It trades about -0.1 of its total potential returns per unit of risk. Technology Ultrasector Profund is currently generating about 0.08 per unit of volatility. If you would invest  3,898  in Technology Ultrasector Profund on September 28, 2024 and sell it today you would earn a total of  340.00  from holding Technology Ultrasector Profund or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Goldman Sachs Small  vs.  Technology Ultrasector Profund

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.

Technology Ultrasector

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Ultrasector Profund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Ultrasector may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Technology Ultrasector

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

The idea behind Goldman Sachs Small and Technology Ultrasector Profund 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.