Correlation Between Global X and Goldman Sachs

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

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

Diversification Opportunities for Global X and Goldman Sachs

0.9

Correlation Coefficient

Global X  Goldman Sachs

Almost no diversification

The 3 months correlation between Global and Goldman is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global X Infrastructure and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and Global X 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 Global X Infrastructure 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 Future has no effect on the direction of Global X i.e., Global X and Goldman Sachs go up and down completely randomly.

Pair Corralation between Global X and Goldman Sachs

Given the investment horizon of 90 days Global X Infrastructure is expected to generate 0.89 times more return on investment than Goldman Sachs. However, Global X Infrastructure is 1.12 times less risky than Goldman Sachs. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Future is currently generating about 0.09 per unit of risk. If you would invest  3,100  in Global X Infrastructure on September 15, 2024 and sell it today you would earn a total of  1,217  from holding Global X Infrastructure or generate 39.26% return on investment over 90 days.

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

Global X Infrastructure  vs.  Goldman Sachs Future

Global X Infrastructure

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Future

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish technical and fundamental indicators, Goldman Sachs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and Goldman Sachs

The main advantage of trading using opposite Global X and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Infrastructure and Goldman Sachs Future 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.