Correlation Between Gold Bullion and Goldman Sachs

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

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

Diversification Opportunities for Gold Bullion and Goldman Sachs

-0.26

Correlation Coefficient

Gold Bullion  Goldman Sachs

Very good diversification

The 3 months correlation between Gold and Goldman is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion 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 Gold Bullion 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 The Gold Bullion 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 Gold Bullion i.e., Gold Bullion and Goldman Sachs go up and down completely randomly.

Pair Corralation between Gold Bullion and Goldman Sachs

Assuming the 90 days horizon The Gold Bullion is expected to generate 0.56 times more return on investment than Goldman Sachs. However, The Gold Bullion is 1.8 times less risky than Goldman Sachs. It trades about 0.29 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about -0.07 per unit of risk. If you would invest  1,967  in The Gold Bullion on December 19, 2024 and sell it today you would earn a total of  328.00  from holding The Gold Bullion or generate 16.68% return on investment over 90 days.

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

The Gold Bullion  vs.  Goldman Sachs Technology

Gold Bullion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bullion are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gold Bullion showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Technology

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gold Bullion and Goldman Sachs

The main advantage of trading using opposite Gold Bullion and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bullion 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 The Gold Bullion 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.