Correlation Between Mid Cap and Goldman Sachs

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Goldman Sachs Smallmid, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Goldman Sachs.

Diversification Opportunities for Mid Cap and Goldman Sachs

0.98

Correlation Coefficient

Mid Cap  Goldman Sachs

Almost no diversification

The 3 months correlation between Mid and Goldman is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Goldman Sachs Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Smallmid and Mid Cap 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 Mid Cap 15x Strategy 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 Smallmid has no effect on the direction of Mid Cap i.e., Mid Cap and Goldman Sachs go up and down completely randomly.

Pair Corralation between Mid Cap and Goldman Sachs

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Goldman Sachs. In addition to that, Mid Cap is 1.39 times more volatile than Goldman Sachs Smallmid. It trades about -0.26 of its total potential returns per unit of risk. Goldman Sachs Smallmid is currently generating about -0.23 per unit of volatility. If you would invest  2,654  in Goldman Sachs Smallmid on October 9, 2024 and sell it today you would lose (140.00) from holding Goldman Sachs Smallmid or give up 5.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

Mid Cap 15x Strategy  vs.  Goldman Sachs Smallmid

Mid Cap 15x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Smallmid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Smallmid has generated negative risk-adjusted returns adding no value to fund investors. 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 Mid Cap and Goldman Sachs

The main advantage of trading using opposite Mid Cap and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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 Mid Cap 15x Strategy and Goldman Sachs Smallmid 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.