Correlation Between Goldman Sachs and Strats Trust

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

By analyzing existing cross correlation between Goldman Sachs Capital and Strats Trust Cellular, you can compare the effects of market volatilities on Goldman Sachs and Strats Trust 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 Strats Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Strats Trust.

Diversification Opportunities for Goldman Sachs and Strats Trust

-0.03

Correlation Coefficient

Goldman Sachs  Strats Trust

Good diversification

The 3 months correlation between Goldman and Strats is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Capital and Strats Trust Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats Trust Cellular 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 Capital are associated (or correlated) with Strats Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats Trust Cellular has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Strats Trust go up and down completely randomly.

Pair Corralation between Goldman Sachs and Strats Trust

Considering the 90-day investment horizon Goldman Sachs is expected to generate 1.46 times less return on investment than Strats Trust. In addition to that, Goldman Sachs is 1.45 times more volatile than Strats Trust Cellular. It trades about 0.03 of its total potential returns per unit of risk. Strats Trust Cellular is currently generating about 0.06 per unit of volatility. If you would invest  817.00  in Strats Trust Cellular on December 5, 2024 and sell it today you would earn a total of  130.00  from holding Strats Trust Cellular or generate 15.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.1%
Values	Daily Returns

Goldman Sachs Capital  vs.  Strats Trust Cellular

Goldman Sachs Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Strats Trust Cellular

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strats Trust Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Goldman Sachs and Strats Trust

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

The idea behind Goldman Sachs Capital and Strats Trust Cellular 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.