Correlation Between Fundamental Indexplus and Goldman Sachs

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

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

Diversification Opportunities for Fundamental Indexplus and Goldman Sachs

0.68

Correlation Coefficient

Fundamental Indexplus  Goldman Sachs

Poor diversification

The 3 months correlation between Fundamental and Goldman is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Indexplus Tr and Goldman Sachs Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Balanced and Fundamental Indexplus 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 Fundamental Indexplus Tr 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 Balanced has no effect on the direction of Fundamental Indexplus i.e., Fundamental Indexplus and Goldman Sachs go up and down completely randomly.

Pair Corralation between Fundamental Indexplus and Goldman Sachs

Assuming the 90 days horizon Fundamental Indexplus Tr is expected to generate 2.24 times more return on investment than Goldman Sachs. However, Fundamental Indexplus is 2.24 times more volatile than Goldman Sachs Balanced. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs Balanced is currently generating about 0.05 per unit of risk. If you would invest  1,754  in Fundamental Indexplus Tr on September 16, 2024 and sell it today you would earn a total of  46.00  from holding Fundamental Indexplus Tr or generate 2.62% return on investment over 90 days.

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

Fundamental Indexplus Tr  vs.  Goldman Sachs Balanced

Fundamental Indexplus

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Indexplus Tr are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fundamental Indexplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Balanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Balanced are ranked lower than 4 (%) 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 Fundamental Indexplus and Goldman Sachs

The main advantage of trading using opposite Fundamental Indexplus and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Indexplus 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 Fundamental Indexplus Tr and Goldman Sachs Balanced 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.