Correlation Between Leader Short and Goldman Sachs

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

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

Diversification Opportunities for Leader Short and Goldman Sachs

-0.42

Correlation Coefficient

Leader Short  Goldman Sachs

Very good diversification

The 3 months correlation between Leader and Goldman is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Leader Short Term Bond and Goldman Sachs Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Government and Leader Short 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 Leader Short Term Bond 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 Government has no effect on the direction of Leader Short i.e., Leader Short and Goldman Sachs go up and down completely randomly.

Pair Corralation between Leader Short and Goldman Sachs

Assuming the 90 days horizon Leader Short Term Bond is expected to generate 0.75 times more return on investment than Goldman Sachs. However, Leader Short Term Bond is 1.33 times less risky than Goldman Sachs. It trades about 0.15 of its potential returns per unit of risk. Goldman Sachs Government is currently generating about 0.0 per unit of risk. If you would invest  659.00  in Leader Short Term Bond on October 24, 2024 and sell it today you would earn a total of  169.00  from holding Leader Short Term Bond or generate 25.64% return on investment over 90 days.

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

Leader Short Term Bond  vs.  Goldman Sachs Government

Leader Short Term

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Short Term Bond are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Leader Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong 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 Leader Short and Goldman Sachs

The main advantage of trading using opposite Leader Short and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Short 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 Leader Short Term Bond and Goldman Sachs Government 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.