Correlation Between Loomis Sayles and Goldman Sachs

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

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

Diversification Opportunities for Loomis Sayles and Goldman Sachs

-0.54

Correlation Coefficient

Loomis Sayles  Goldman Sachs

Excellent diversification

The 3 months correlation between Loomis and Goldman is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Loomis Sayles Inflation and Goldman Sachs Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mid and Loomis Sayles 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 Loomis Sayles Inflation 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 Mid has no effect on the direction of Loomis Sayles i.e., Loomis Sayles and Goldman Sachs go up and down completely randomly.

Pair Corralation between Loomis Sayles and Goldman Sachs

Assuming the 90 days horizon Loomis Sayles Inflation is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Loomis Sayles Inflation is 4.11 times less risky than Goldman Sachs. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Goldman Sachs Mid is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,666  in Goldman Sachs Mid on September 17, 2024 and sell it today you would lose (47.00) from holding Goldman Sachs Mid or give up 1.28% of portfolio value over 90 days.

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

Loomis Sayles Inflation  vs.  Goldman Sachs Mid

Loomis Sayles Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loomis Sayles Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Loomis Sayles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Loomis Sayles and Goldman Sachs

The main advantage of trading using opposite Loomis Sayles and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loomis Sayles 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 Loomis Sayles Inflation and Goldman Sachs Mid 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.