Correlation Between Goldman Sachs and AdvisorShares Gerber

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

By analyzing existing cross correlation between Goldman Sachs Future and AdvisorShares Gerber Kawasaki, you can compare the effects of market volatilities on Goldman Sachs and AdvisorShares Gerber 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 AdvisorShares Gerber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and AdvisorShares Gerber.

Diversification Opportunities for Goldman Sachs and AdvisorShares Gerber

0.81

Correlation Coefficient

Goldman Sachs  AdvisorShares Gerber

Very poor diversification

The 3 months correlation between Goldman and AdvisorShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and AdvisorShares Gerber Kawasaki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Gerber 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 Future are associated (or correlated) with AdvisorShares Gerber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Gerber has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and AdvisorShares Gerber go up and down completely randomly.

Pair Corralation between Goldman Sachs and AdvisorShares Gerber

Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the AdvisorShares Gerber. In addition to that, Goldman Sachs is 1.19 times more volatile than AdvisorShares Gerber Kawasaki. It trades about -0.16 of its total potential returns per unit of risk. AdvisorShares Gerber Kawasaki is currently generating about -0.16 per unit of volatility. If you would invest  2,270  in AdvisorShares Gerber Kawasaki on October 10, 2024 and sell it today you would lose (88.00) from holding AdvisorShares Gerber Kawasaki or give up 3.88% of portfolio value over 90 days.

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

Goldman Sachs Future  vs.  AdvisorShares Gerber Kawasaki

Goldman Sachs Future

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

AdvisorShares Gerber

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Gerber Kawasaki are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, AdvisorShares Gerber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Goldman Sachs and AdvisorShares Gerber

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

The idea behind Goldman Sachs Future and AdvisorShares Gerber Kawasaki 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.