Correlation Between Stellar and Goldman Sachs

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

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

Diversification Opportunities for Stellar and Goldman Sachs

-0.76

Correlation Coefficient

Stellar  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Stellar and Goldman is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and Stellar 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 Stellar 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 MarketBeta has no effect on the direction of Stellar i.e., Stellar and Goldman Sachs go up and down completely randomly.

Pair Corralation between Stellar and Goldman Sachs

Assuming the 90 days trading horizon Stellar is expected to generate 11.74 times more return on investment than Goldman Sachs. However, Stellar is 11.74 times more volatile than Goldman Sachs MarketBeta. It trades about -0.02 of its potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about -0.28 per unit of risk. If you would invest  43.00  in Stellar on October 12, 2024 and sell it today you would lose (4.00) from holding Stellar or give up 9.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Stellar  vs.  Goldman Sachs MarketBeta

Stellar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs MarketBeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs MarketBeta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Stellar and Goldman Sachs

The main advantage of trading using opposite Stellar and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar and Goldman Sachs MarketBeta 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.