Correlation Between Guidemark Large and Goldman Sachs

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Can any of the company-specific risk be diversified away by investing in both Guidemark Large 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 Guidemark Large and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidemark Large Cap and Goldman Sachs Growth, you can compare the effects of market volatilities on Guidemark Large 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 Guidemark Large with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark Large and Goldman Sachs.

Diversification Opportunities for Guidemark Large and Goldman Sachs

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Guidemark and Goldman is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Large Cap and Goldman Sachs Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Growth and Guidemark Large 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 Guidemark Large Cap 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 Growth has no effect on the direction of Guidemark Large i.e., Guidemark Large and Goldman Sachs go up and down completely randomly.

Pair Corralation between Guidemark Large and Goldman Sachs

Assuming the 90 days horizon Guidemark Large is expected to generate 1.18 times less return on investment than Goldman Sachs. In addition to that, Guidemark Large is 1.25 times more volatile than Goldman Sachs Growth. It trades about 0.07 of its total potential returns per unit of risk. Goldman Sachs Growth is currently generating about 0.1 per unit of volatility. If you would invest  1,701  in Goldman Sachs Growth on September 14, 2024 and sell it today you would earn a total of  327.00  from holding Goldman Sachs Growth or generate 19.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Guidemark Large Cap  vs.  Goldman Sachs Growth

 Performance 
       Timeline  
Guidemark Large Cap 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guidemark Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Goldman Sachs Growth 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Goldman Sachs Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidemark Large and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guidemark Large and Goldman Sachs

The main advantage of trading using opposite Guidemark Large and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark Large 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 Guidemark Large Cap and Goldman Sachs Growth 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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