Correlation Between FlexShares International and Goldman Sachs

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

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

Diversification Opportunities for FlexShares International and Goldman Sachs

0.56

Correlation Coefficient

FlexShares International  Goldman Sachs

Very weak diversification

The 3 months correlation between FlexShares and Goldman is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares International Quali and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access and FlexShares International 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 FlexShares International Quality 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 Access has no effect on the direction of FlexShares International i.e., FlexShares International and Goldman Sachs go up and down completely randomly.

Pair Corralation between FlexShares International and Goldman Sachs

Given the investment horizon of 90 days FlexShares International Quality is expected to generate 2.62 times more return on investment than Goldman Sachs. However, FlexShares International is 2.62 times more volatile than Goldman Sachs Access. It trades about -0.04 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about -0.12 per unit of risk. If you would invest  2,543  in FlexShares International Quality on September 16, 2024 and sell it today you would lose (63.00) from holding FlexShares International Quality or give up 2.48% of portfolio value over 90 days.

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

FlexShares International Quali  vs.  Goldman Sachs Access

FlexShares International

Risk-Adjusted Performance

0 of 100

Very Weak

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

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. Despite somewhat strong technical and fundamental 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 FlexShares International and Goldman Sachs

The main advantage of trading using opposite FlexShares International and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares International 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 FlexShares International Quality and Goldman Sachs Access 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.