Correlation Between Bny Mellon and Goldman Sachs

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

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

Diversification Opportunities for Bny Mellon and Goldman Sachs

-0.66

Correlation Coefficient

Bny Mellon  Goldman Sachs

Excellent diversification

The 3 months correlation between Bny and Goldman is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Emerging and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and Bny Mellon 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 Bny Mellon Emerging 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 Technology has no effect on the direction of Bny Mellon i.e., Bny Mellon and Goldman Sachs go up and down completely randomly.

Pair Corralation between Bny Mellon and Goldman Sachs

Assuming the 90 days horizon Bny Mellon Emerging is expected to generate 0.34 times more return on investment than Goldman Sachs. However, Bny Mellon Emerging is 2.9 times less risky than Goldman Sachs. It trades about -0.41 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about -0.16 per unit of risk. If you would invest  1,089  in Bny Mellon Emerging on October 8, 2024 and sell it today you would lose (50.00) from holding Bny Mellon Emerging or give up 4.59% of portfolio value over 90 days.

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

Bny Mellon Emerging  vs.  Goldman Sachs Technology

Bny Mellon Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Goldman Sachs Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Bny Mellon and Goldman Sachs

The main advantage of trading using opposite Bny Mellon and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bny Mellon 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 Bny Mellon Emerging and Goldman Sachs Technology 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.