Correlation Between Leisure Fund and Goldman Sachs

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

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

Diversification Opportunities for Leisure Fund and Goldman Sachs

0.63

Correlation Coefficient

Leisure Fund  Goldman Sachs

Poor diversification

The 3 months correlation between Leisure and GOLDMAN is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Leisure Fund Class and Goldman Sachs Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Real and Leisure Fund 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 Leisure Fund Class 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 Real has no effect on the direction of Leisure Fund i.e., Leisure Fund and Goldman Sachs go up and down completely randomly.

Pair Corralation between Leisure Fund and Goldman Sachs

Assuming the 90 days horizon Leisure Fund Class is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Leisure Fund Class is 1.04 times less risky than Goldman Sachs. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Goldman Sachs Real is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,197  in Goldman Sachs Real on December 22, 2024 and sell it today you would earn a total of  13.00  from holding Goldman Sachs Real or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Leisure Fund Class  vs.  Goldman Sachs Real

Leisure Fund Class

Risk-Adjusted Performance

Very Weak

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

Goldman Sachs Real

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Real are ranked lower than 1 (%) 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 Leisure Fund and Goldman Sachs

The main advantage of trading using opposite Leisure Fund and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leisure Fund 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 Leisure Fund Class and Goldman Sachs Real 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.