Correlation Between SPDR Kensho and Goldman Sachs

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

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

Diversification Opportunities for SPDR Kensho and Goldman Sachs

0.96

Correlation Coefficient

SPDR Kensho  Goldman Sachs

Almost no diversification

The 3 months correlation between SPDR and Goldman is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and Goldman Sachs Innovate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Innovate and SPDR Kensho 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 SPDR Kensho New 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 Innovate has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and Goldman Sachs go up and down completely randomly.

Pair Corralation between SPDR Kensho and Goldman Sachs

Given the investment horizon of 90 days SPDR Kensho is expected to generate 1.29 times less return on investment than Goldman Sachs. In addition to that, SPDR Kensho is 1.26 times more volatile than Goldman Sachs Innovate. It trades about 0.06 of its total potential returns per unit of risk. Goldman Sachs Innovate is currently generating about 0.1 per unit of volatility. If you would invest  3,988  in Goldman Sachs Innovate on September 15, 2024 and sell it today you would earn a total of  2,471  from holding Goldman Sachs Innovate or generate 61.96% return on investment over 90 days.

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

SPDR Kensho New  vs.  Goldman Sachs Innovate

SPDR Kensho New

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho New are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, SPDR Kensho reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Innovate

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Innovate are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SPDR Kensho and Goldman Sachs

The main advantage of trading using opposite SPDR Kensho and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho 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 SPDR Kensho New and Goldman Sachs Innovate 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.