Correlation Between Goldman Sachs and Transamerica Intermediate

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

Diversification Opportunities for Goldman Sachs and Transamerica Intermediate

0.48

Correlation Coefficient

Goldman Sachs  Transamerica Intermediate

Very weak diversification

The 3 months correlation between Goldman and Transamerica is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Small and Transamerica Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intermediate 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 Transamerica Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intermediate has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Transamerica Intermediate go up and down completely randomly.

Pair Corralation between Goldman Sachs and Transamerica Intermediate

Assuming the 90 days horizon Goldman Sachs Small is expected to under-perform the Transamerica Intermediate. In addition to that, Goldman Sachs is 12.84 times more volatile than Transamerica Intermediate Muni. It trades about -0.33 of its total potential returns per unit of risk. Transamerica Intermediate Muni is currently generating about -0.37 per unit of volatility. If you would invest  1,092  in Transamerica Intermediate Muni on October 9, 2024 and sell it today you would lose (19.00) from holding Transamerica Intermediate Muni or give up 1.74% of portfolio value over 90 days.

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

Goldman Sachs Small  vs.  Transamerica Intermediate Muni

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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Transamerica Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Intermediate Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transamerica Intermediate 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 Transamerica Intermediate

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

The idea behind Goldman Sachs Small and Transamerica Intermediate Muni 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.