Correlation Between Goldman Sachs and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and IShares Treasury 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 IShares Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Global and iShares Treasury Bond, you can compare the effects of market volatilities on Goldman Sachs and IShares Treasury 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 IShares Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and IShares Treasury.
Diversification Opportunities for Goldman Sachs and IShares Treasury
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Global and iShares Treasury Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Bond 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 Global are associated (or correlated) with IShares Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Bond has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares Treasury go up and down completely randomly.
Pair Corralation between Goldman Sachs and IShares Treasury
Assuming the 90 days trading horizon Goldman Sachs Global is expected to generate 0.24 times more return on investment than IShares Treasury. However, Goldman Sachs Global is 4.14 times less risky than IShares Treasury. It trades about -0.04 of its potential returns per unit of risk. iShares Treasury Bond is currently generating about -0.1 per unit of risk. If you would invest 4,400 in Goldman Sachs Global on August 30, 2024 and sell it today you would lose (18.00) from holding Goldman Sachs Global or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Global vs. iShares Treasury Bond
Performance |
| Timeline |
| Goldman Sachs Global |
| iShares Treasury Bond |
Goldman Sachs and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and IShares Treasury
The main advantage of trading using opposite Goldman Sachs and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, IShares Treasury 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 IShares Treasury will offset losses from the drop in IShares Treasury's long position.| Goldman Sachs vs. Vanguard FTSE Developed | Goldman Sachs vs. Leverage Shares 2x | Goldman Sachs vs. Amundi Index Solutions | Goldman Sachs vs. Amundi Index Solutions |
| IShares Treasury vs. iShares MSCI Japan | IShares Treasury vs. iShares JP Morgan | IShares Treasury vs. iShares MSCI Europe | IShares Treasury vs. iShares Nasdaq Biotechnology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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