Correlation Between VictoryShares THB and Goldman Sachs

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

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

Diversification Opportunities for VictoryShares THB and Goldman Sachs

0.56

Correlation Coefficient

VictoryShares THB  Goldman Sachs

Very weak diversification

The 3 months correlation between VictoryShares and Goldman is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and Goldman Sachs Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Hedge and VictoryShares THB 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 VictoryShares THB Mid 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 Hedge has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and Goldman Sachs go up and down completely randomly.

Pair Corralation between VictoryShares THB and Goldman Sachs

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the Goldman Sachs. But the etf apears to be less risky and, when comparing its historical volatility, VictoryShares THB Mid is 1.68 times less risky than Goldman Sachs. The etf trades about -0.08 of its potential returns per unit of risk. The Goldman Sachs Hedge is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  12,711  in Goldman Sachs Hedge on December 24, 2024 and sell it today you would lose (571.00) from holding Goldman Sachs Hedge or give up 4.49% of portfolio value over 90 days.

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

VictoryShares THB Mid  vs.  Goldman Sachs Hedge

VictoryShares THB Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, VictoryShares THB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Goldman Sachs Hedge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Hedge has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VictoryShares THB and Goldman Sachs

The main advantage of trading using opposite VictoryShares THB and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares THB 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 VictoryShares THB Mid and Goldman Sachs Hedge 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.