Correlation Between Target Retirement and Goldman Sachs

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

By analyzing existing cross correlation between Target Retirement 2040 and Goldman Sachs Mlp, you can compare the effects of market volatilities on Target Retirement 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 Target Retirement with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Goldman Sachs.

Diversification Opportunities for Target Retirement and Goldman Sachs

0.26

Correlation Coefficient

Target Retirement  Goldman Sachs

Modest diversification

The 3 months correlation between Target and Goldman is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 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 Target Retirement 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 Target Retirement 2040 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 Target Retirement i.e., Target Retirement and Goldman Sachs go up and down completely randomly.

Pair Corralation between Target Retirement and Goldman Sachs

Assuming the 90 days horizon Target Retirement 2040 is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Target Retirement 2040 is 1.18 times less risky than Goldman Sachs. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Goldman Sachs Mlp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,322  in Goldman Sachs Mlp on October 8, 2024 and sell it today you would earn a total of  180.00  from holding Goldman Sachs Mlp or generate 5.42% return on investment over 90 days.

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

Target Retirement 2040  vs.  Goldman Sachs Mlp

Target Retirement 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Retirement 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Target Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Mlp

Risk-Adjusted Performance

8 of 100

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 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 Target Retirement and Goldman Sachs

The main advantage of trading using opposite Target Retirement and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement 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 Target Retirement 2040 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.