Correlation Between California Bond and Goldman Sachs

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

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

Diversification Opportunities for California Bond and Goldman Sachs

0.31

Correlation Coefficient

California Bond  Goldman Sachs

Weak diversification

The 3 months correlation between California and Goldman is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern and California Bond 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 California Bond Fund 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 Intern has no effect on the direction of California Bond i.e., California Bond and Goldman Sachs go up and down completely randomly.

Pair Corralation between California Bond and Goldman Sachs

Assuming the 90 days horizon California Bond Fund is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, California Bond Fund is 2.89 times less risky than Goldman Sachs. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Goldman Sachs International is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,350  in Goldman Sachs International on December 28, 2024 and sell it today you would earn a total of  143.00  from holding Goldman Sachs International or generate 10.59% return on investment over 90 days.

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

California Bond Fund  vs.  Goldman Sachs International

California Bond

Risk-Adjusted Performance

Very Weak

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

Goldman Sachs Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs International are ranked lower than 15 (%) 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 California Bond and Goldman Sachs

The main advantage of trading using opposite California Bond and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond 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 California Bond Fund and Goldman Sachs International 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 CEOs Directory module to screen CEOs from public companies around the world.