Correlation Between Short Oil and Goldman Sachs

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

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

Diversification Opportunities for Short Oil and Goldman Sachs

-0.6

Correlation Coefficient

Short Oil  Goldman Sachs

Excellent diversification

The 3 months correlation between Short and Goldman is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Goldman Sachs Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mlp and Short Oil 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 Short Oil Gas 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 Mlp has no effect on the direction of Short Oil i.e., Short Oil and Goldman Sachs go up and down completely randomly.

Pair Corralation between Short Oil and Goldman Sachs

Assuming the 90 days horizon Short Oil Gas is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Oil Gas is 1.03 times less risky than Goldman Sachs. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Goldman Sachs Mlp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,346  in Goldman Sachs Mlp on December 21, 2024 and sell it today you would earn a total of  105.00  from holding Goldman Sachs Mlp or generate 7.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Short Oil Gas  vs.  Goldman Sachs Mlp

Short Oil Gas

Risk-Adjusted Performance

Very Weak

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

Goldman Sachs Mlp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Mlp are ranked lower than 8 (%) 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 Short Oil and Goldman Sachs

The main advantage of trading using opposite Short Oil and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil 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 Short Oil Gas and Goldman Sachs Mlp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.