Correlation Between IShares Treasury and Goldman Sachs

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

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

Diversification Opportunities for IShares Treasury and Goldman Sachs

0.6

Correlation Coefficient

IShares Treasury  Goldman Sachs

Poor diversification

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

Pair Corralation between IShares Treasury and Goldman Sachs

Given the investment horizon of 90 days IShares Treasury is expected to generate 1.36 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, iShares Treasury Floating is 2.3 times less risky than Goldman Sachs. It trades about 0.87 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest  4,983  in Goldman Sachs Access on December 30, 2024 and sell it today you would earn a total of  72.00  from holding Goldman Sachs Access or generate 1.44% return on investment over 90 days.

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

iShares Treasury Floating  vs.  Goldman Sachs Access

iShares Treasury Floating

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 68 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Goldman Sachs Access

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Access are ranked lower than 40 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Treasury and Goldman Sachs

The main advantage of trading using opposite IShares Treasury and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury 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 iShares Treasury Floating and Goldman Sachs Access 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.