Correlation Between Technology Select and Goldman Sachs

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

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

Diversification Opportunities for Technology Select and Goldman Sachs

0.88

Correlation Coefficient

Technology Select  Goldman Sachs

Very poor diversification

The 3 months correlation between Technology and Goldman is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and Technology Select 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 Technology Select Sector 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 Future has no effect on the direction of Technology Select i.e., Technology Select and Goldman Sachs go up and down completely randomly.

Pair Corralation between Technology Select and Goldman Sachs

Considering the 90-day investment horizon Technology Select Sector is expected to under-perform the Goldman Sachs. In addition to that, Technology Select is 1.01 times more volatile than Goldman Sachs Future. It trades about -0.11 of its total potential returns per unit of risk. Goldman Sachs Future is currently generating about -0.07 per unit of volatility. If you would invest  3,256  in Goldman Sachs Future on December 30, 2024 and sell it today you would lose (247.00) from holding Goldman Sachs Future or give up 7.59% of portfolio value over 90 days.

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

Technology Select Sector  vs.  Goldman Sachs Future

Technology Select Sector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology Select Sector has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Goldman Sachs Future

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Etf's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Technology Select and Goldman Sachs

The main advantage of trading using opposite Technology Select and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select 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 Technology Select Sector and Goldman Sachs Future 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 Stocks Directory module to find actively traded stocks across global markets.