Correlation Between Reaves Select and Goldman Sachs

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

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

Diversification Opportunities for Reaves Select and Goldman Sachs

0.31

Correlation Coefficient

Reaves Select  Goldman Sachs

Weak diversification

The 3 months correlation between Reaves and Goldman is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Reaves Select Research and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global and Reaves Select 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 Reaves Select Research 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 Global has no effect on the direction of Reaves Select i.e., Reaves Select and Goldman Sachs go up and down completely randomly.

Pair Corralation between Reaves Select and Goldman Sachs

Assuming the 90 days horizon Reaves Select is expected to generate 2.66 times less return on investment than Goldman Sachs. In addition to that, Reaves Select is 1.46 times more volatile than Goldman Sachs Global. It trades about 0.03 of its total potential returns per unit of risk. Goldman Sachs Global is currently generating about 0.14 per unit of volatility. If you would invest  1,197  in Goldman Sachs Global on December 22, 2024 and sell it today you would earn a total of  79.00  from holding Goldman Sachs Global or generate 6.6% return on investment over 90 days.

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

Reaves Select Research  vs.  Goldman Sachs Global

Reaves Select Research

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reaves Select Research are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Reaves Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Global are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Reaves Select and Goldman Sachs

The main advantage of trading using opposite Reaves Select and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reaves Select 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 Reaves Select Research and Goldman Sachs Global 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.