Correlation Between World Precious and Goldman Sachs

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

Diversification Opportunities for World Precious and Goldman Sachs

0.62

Correlation Coefficient

World Precious  Goldman Sachs

Poor diversification

The 3 months correlation between World and Goldman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding World Precious Minerals and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and World 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 World Precious Minerals 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 Short has no effect on the direction of World Precious i.e., World Precious and Goldman Sachs go up and down completely randomly.

Pair Corralation between World Precious and Goldman Sachs

Assuming the 90 days horizon World Precious Minerals is expected to generate 17.85 times more return on investment than Goldman Sachs. However, World Precious is 17.85 times more volatile than Goldman Sachs Short. It trades about 0.26 of its potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.18 per unit of risk. If you would invest  146.00  in World Precious Minerals on December 20, 2024 and sell it today you would earn a total of  39.00  from holding World Precious Minerals or generate 26.71% return on investment over 90 days.

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

World Precious Minerals  vs.  Goldman Sachs Short

World Precious Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in World Precious Minerals are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, World Precious showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 14 (%) 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 World Precious and Goldman Sachs

The main advantage of trading using opposite World Precious and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World 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 World Precious Minerals and Goldman Sachs Short 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.