Correlation Between Short Precious and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Short Precious 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 Precious 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 Precious Metals and Goldman Sachs Strategic, you can compare the effects of market volatilities on Short Precious 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 Precious with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Precious and Goldman Sachs.

Diversification Opportunities for Short Precious and Goldman Sachs

0.25

Correlation Coefficient

Short Precious  Goldman Sachs

Modest diversification

The 3 months correlation between Short and Goldman is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals and Goldman Sachs Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Strategic and Short Precious 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 Precious Metals 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 Strategic has no effect on the direction of Short Precious i.e., Short Precious and Goldman Sachs go up and down completely randomly.

Pair Corralation between Short Precious and Goldman Sachs

Assuming the 90 days horizon Short Precious Metals is expected to under-perform the Goldman Sachs. In addition to that, Short Precious is 1.35 times more volatile than Goldman Sachs Strategic. It trades about -0.21 of its total potential returns per unit of risk. Goldman Sachs Strategic is currently generating about 0.02 per unit of volatility. If you would invest  1,372  in Goldman Sachs Strategic on October 21, 2024 and sell it today you would earn a total of  4.00  from holding Goldman Sachs Strategic or generate 0.29% return on investment over 90 days.

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

Short Precious Metals  vs.  Goldman Sachs Strategic

Short Precious Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Short Precious Metals are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Short Precious showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Strategic

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Strategic are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Short Precious and Goldman Sachs

The main advantage of trading using opposite Short Precious and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Precious 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 Precious Metals and Goldman Sachs Strategic 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.