Correlation Between Ionet and Goldman Sachs

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

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

Diversification Opportunities for Ionet and Goldman Sachs

-0.06

Correlation Coefficient

Ionet  Goldman Sachs

Good diversification

The 3 months correlation between Ionet and GOLDMAN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ionet and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Ionet 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 ionet 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 Short has no effect on the direction of Ionet i.e., Ionet and Goldman Sachs go up and down completely randomly.

Pair Corralation between Ionet and Goldman Sachs

Assuming the 90 days horizon ionet is expected to generate 62.58 times more return on investment than Goldman Sachs. However, Ionet is 62.58 times more volatile than Goldman Sachs Short. It trades about 0.22 of its potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.03 per unit of risk. If you would invest  150.00  in ionet on September 3, 2024 and sell it today you would earn a total of  197.00  from holding ionet or generate 131.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

ionet  vs.  Goldman Sachs Short

ionet

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ionet are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ionet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Short

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ionet and Goldman Sachs

The main advantage of trading using opposite Ionet and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ionet 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 ionet and Goldman Sachs Short 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.