Correlation Between Goldman Sachs and FlexShares IBoxx

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and FlexShares IBoxx 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 FlexShares IBoxx 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 FlexShares iBoxx 5 Year, you can compare the effects of market volatilities on Goldman Sachs and FlexShares IBoxx 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 FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and FlexShares IBoxx.

Diversification Opportunities for Goldman Sachs and FlexShares IBoxx

0.99

Correlation Coefficient

Goldman Sachs  FlexShares IBoxx

No risk reduction

The 3 months correlation between Goldman and FlexShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Access and FlexShares iBoxx 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares iBoxx 5 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 FlexShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares iBoxx 5 has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and FlexShares IBoxx go up and down completely randomly.

Pair Corralation between Goldman Sachs and FlexShares IBoxx

Given the investment horizon of 90 days Goldman Sachs Access is expected to under-perform the FlexShares IBoxx. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Access is 1.02 times less risky than FlexShares IBoxx. The etf trades about -0.32 of its potential returns per unit of risk. The FlexShares iBoxx 5 Year is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  2,347  in FlexShares iBoxx 5 Year on September 25, 2024 and sell it today you would lose (30.00) from holding FlexShares iBoxx 5 Year or give up 1.28% of portfolio value over 90 days.

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

Goldman Sachs Access  vs.  FlexShares iBoxx 5 Year

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

FlexShares iBoxx 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares iBoxx 5 Year has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FlexShares IBoxx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Goldman Sachs and FlexShares IBoxx

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

The idea behind Goldman Sachs Access and FlexShares iBoxx 5 Year 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.