Correlation Between Goldman Sachs and IShares Trust

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

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

Diversification Opportunities for Goldman Sachs and IShares Trust

-0.68

Correlation Coefficient

Goldman Sachs  IShares Trust

Excellent diversification

The 3 months correlation between Goldman and IShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Access and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Access are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares Trust go up and down completely randomly.

Pair Corralation between Goldman Sachs and IShares Trust

Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.08 times less return on investment than IShares Trust. In addition to that, Goldman Sachs is 4.95 times more volatile than iShares Trust. It trades about 0.1 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.56 per unit of volatility. If you would invest  2,538  in iShares Trust on September 15, 2024 and sell it today you would earn a total of  12.00  from holding iShares Trust or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Goldman Sachs Access  vs.  iShares Trust

Goldman Sachs Access

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Access has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

iShares Trust

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, IShares Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and IShares Trust

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

The idea behind Goldman Sachs Access and iShares Trust 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.