Correlation Between Goldman Sachs and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and FlexShares STOXX 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 Goldman Sachs and FlexShares STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs ActiveBeta and FlexShares STOXX Global, you can compare the effects of market volatilities on Goldman Sachs and FlexShares STOXX 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 Goldman Sachs with a short position of FlexShares STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and FlexShares STOXX.
Diversification Opportunities for Goldman Sachs and FlexShares STOXX
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and FlexShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global and Goldman Sachs 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 Goldman Sachs ActiveBeta are associated (or correlated) with FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and FlexShares STOXX go up and down completely randomly.
Pair Corralation between Goldman Sachs and FlexShares STOXX
Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to generate 1.12 times more return on investment than FlexShares STOXX. However, Goldman Sachs is 1.12 times more volatile than FlexShares STOXX Global. It trades about 0.33 of its potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.29 per unit of risk. If you would invest 4,953 in Goldman Sachs ActiveBeta on September 1, 2024 and sell it today you would earn a total of 232.00 from holding Goldman Sachs ActiveBeta or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs ActiveBeta vs. FlexShares STOXX Global
Performance |
| Timeline |
| Goldman Sachs ActiveBeta |
| FlexShares STOXX Global |
Goldman Sachs and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and FlexShares STOXX
The main advantage of trading using opposite Goldman Sachs and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, FlexShares STOXX 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 FlexShares STOXX will offset losses from the drop in FlexShares STOXX's long position.| Goldman Sachs vs. WisdomTree Interest Rate | Goldman Sachs vs. First Trust Developed | Goldman Sachs vs. VictoryShares International Volatility | Goldman Sachs vs. Aquagold International |
| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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