Correlation Between Real Return and Goldman Sachs

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

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

Diversification Opportunities for Real Return and Goldman Sachs

0.92

Correlation Coefficient

Real Return  Goldman Sachs

Almost no diversification

The 3 months correlation between Real and Goldman is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Real Return Fund and Goldman Sachs Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Inflation and Real Return 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 Real Return Fund 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 Inflation has no effect on the direction of Real Return i.e., Real Return and Goldman Sachs go up and down completely randomly.

Pair Corralation between Real Return and Goldman Sachs

Assuming the 90 days horizon Real Return Fund is expected to generate 1.08 times more return on investment than Goldman Sachs. However, Real Return is 1.08 times more volatile than Goldman Sachs Inflation. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Inflation is currently generating about 0.11 per unit of risk. If you would invest  1,017  in Real Return Fund on December 4, 2024 and sell it today you would earn a total of  19.00  from holding Real Return Fund or generate 1.87% return on investment over 90 days.

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

Real Return Fund  vs.  Goldman Sachs Inflation

Real Return Fund

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Real Return Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Real Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Inflation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Inflation are ranked lower than 8 (%) 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 Real Return and Goldman Sachs

The main advantage of trading using opposite Real Return and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Return 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 Real Return Fund and Goldman Sachs Inflation 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.