Correlation Between Balanced Strategy and Goldman Sachs

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

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

Diversification Opportunities for Balanced Strategy and Goldman Sachs

0.0

Correlation Coefficient

Balanced Strategy  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Balanced and Goldman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Goldman Sachs Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Target and Balanced Strategy 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 Balanced Strategy 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 Target has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Goldman Sachs go up and down completely randomly.

Pair Corralation between Balanced Strategy and Goldman Sachs

If you would invest  1,025  in Balanced Strategy Fund on December 22, 2024 and sell it today you would earn a total of  2.00  from holding Balanced Strategy Fund or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Balanced Strategy Fund  vs.  Goldman Sachs Target

Balanced Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Balanced Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Balanced Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Balanced Strategy and Goldman Sachs

The main advantage of trading using opposite Balanced Strategy and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy 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 Balanced Strategy Fund and Goldman Sachs Target 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.