Correlation Between Gotham Large and Goldman Sachs

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

By analyzing existing cross correlation between Gotham Large Value and Goldman Sachs MarketBeta, you can compare the effects of market volatilities on Gotham Large and Goldman Sachs 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 Gotham Large with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gotham Large and Goldman Sachs.

Diversification Opportunities for Gotham Large and Goldman Sachs

0.08

Correlation Coefficient

Gotham Large  Goldman Sachs

Significant diversification

The 3 months correlation between Gotham and Goldman is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Large Value and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and Gotham Large 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 Gotham Large Value are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs MarketBeta has no effect on the direction of Gotham Large i.e., Gotham Large and Goldman Sachs go up and down completely randomly.

Pair Corralation between Gotham Large and Goldman Sachs

Assuming the 90 days horizon Gotham Large is expected to generate 5.64 times less return on investment than Goldman Sachs. In addition to that, Gotham Large is 1.16 times more volatile than Goldman Sachs MarketBeta. It trades about 0.02 of its total potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about 0.11 per unit of volatility. If you would invest  5,434  in Goldman Sachs MarketBeta on October 26, 2024 and sell it today you would earn a total of  2,960  from holding Goldman Sachs MarketBeta or generate 54.47% return on investment over 90 days.

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

Gotham Large Value  vs.  Goldman Sachs MarketBeta

Gotham Large Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gotham Large Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Goldman Sachs MarketBeta

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs MarketBeta are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gotham Large and Goldman Sachs

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

The idea behind Gotham Large Value and Goldman Sachs MarketBeta 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.