Correlation Between Nasdaq and Goldman Sachs

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

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

Diversification Opportunities for Nasdaq and Goldman Sachs

0.54

Correlation Coefficient

Nasdaq  Goldman Sachs

Very weak diversification

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

Pair Corralation between Nasdaq and Goldman Sachs

Given the investment horizon of 90 days Nasdaq is expected to generate 1.95 times less return on investment than Goldman Sachs. In addition to that, Nasdaq is 3.34 times more volatile than Goldman Sachs Absolute. It trades about 0.05 of its total potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.31 per unit of volatility. If you would invest  962.00  in Goldman Sachs Absolute on September 17, 2024 and sell it today you would earn a total of  15.00  from holding Goldman Sachs Absolute or generate 1.56% return on investment over 90 days.

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

Nasdaq Inc  vs.  Goldman Sachs Absolute

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Absolute

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Absolute are ranked lower than 7 (%) 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 Nasdaq and Goldman Sachs

The main advantage of trading using opposite Nasdaq and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Goldman Sachs Absolute 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.