Correlation Between Alphacentric Hedged and Goldman Sachs

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

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

Diversification Opportunities for Alphacentric Hedged and Goldman Sachs

-0.01

Correlation Coefficient

Alphacentric Hedged  Goldman Sachs

Good diversification

The 3 months correlation between Alphacentric and Goldman is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Goldman Sachs Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Long and Alphacentric Hedged 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 Alphacentric Hedged Market 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 Long has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Goldman Sachs go up and down completely randomly.

Pair Corralation between Alphacentric Hedged and Goldman Sachs

Assuming the 90 days horizon Alphacentric Hedged Market is expected to under-perform the Goldman Sachs. In addition to that, Alphacentric Hedged is 3.5 times more volatile than Goldman Sachs Long. It trades about -0.13 of its total potential returns per unit of risk. Goldman Sachs Long is currently generating about 0.14 per unit of volatility. If you would invest  777.00  in Goldman Sachs Long on December 24, 2024 and sell it today you would earn a total of  14.00  from holding Goldman Sachs Long or generate 1.8% return on investment over 90 days.

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

Alphacentric Hedged Market  vs.  Goldman Sachs Long

Alphacentric Hedged

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphacentric Hedged Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alphacentric Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Long

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Long are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphacentric Hedged and Goldman Sachs

The main advantage of trading using opposite Alphacentric Hedged and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphacentric Hedged 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 Alphacentric Hedged Market and Goldman Sachs Long 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.