Correlation Between Leland Thomson and Goldman Sachs

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

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

Diversification Opportunities for Leland Thomson and Goldman Sachs

-0.31

Correlation Coefficient

Leland Thomson  Goldman Sachs

Very good diversification

The 3 months correlation between Leland and Goldman is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Leland Thomson Reuters and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global and Leland Thomson 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 Leland Thomson Reuters 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 Global has no effect on the direction of Leland Thomson i.e., Leland Thomson and Goldman Sachs go up and down completely randomly.

Pair Corralation between Leland Thomson and Goldman Sachs

Assuming the 90 days horizon Leland Thomson Reuters is expected to generate 1.64 times more return on investment than Goldman Sachs. However, Leland Thomson is 1.64 times more volatile than Goldman Sachs Global. It trades about -0.01 of its potential returns per unit of risk. Goldman Sachs Global is currently generating about -0.15 per unit of risk. If you would invest  2,363  in Leland Thomson Reuters on October 9, 2024 and sell it today you would lose (24.00) from holding Leland Thomson Reuters or give up 1.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Leland Thomson Reuters  vs.  Goldman Sachs Global

Leland Thomson Reuters

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Leland Thomson Reuters has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak fundamental indicators, Leland Thomson may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Goldman Sachs Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Leland Thomson and Goldman Sachs

The main advantage of trading using opposite Leland Thomson and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leland Thomson 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 Leland Thomson Reuters and Goldman Sachs Global 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 Commodity Directory module to find actively traded commodities issued by global exchanges.