Correlation Between FlexShares High and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both FlexShares High 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 FlexShares High and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares High Yield and Goldman Sachs Access, you can compare the effects of market volatilities on FlexShares High 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 FlexShares High with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares High and Goldman Sachs.
Diversification Opportunities for FlexShares High and Goldman Sachs
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares High Yield and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access and FlexShares High 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 FlexShares High Yield 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 Access has no effect on the direction of FlexShares High i.e., FlexShares High and Goldman Sachs go up and down completely randomly.
Pair Corralation between FlexShares High and Goldman Sachs
Given the investment horizon of 90 days FlexShares High Yield is expected to generate 0.92 times more return on investment than Goldman Sachs. However, FlexShares High Yield is 1.09 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.12 per unit of risk. If you would invest 3,553 in FlexShares High Yield on August 31, 2024 and sell it today you would earn a total of 597.00 from holding FlexShares High Yield or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares High Yield vs. Goldman Sachs Access
Performance |
| Timeline |
| FlexShares High Yield |
| Goldman Sachs Access |
FlexShares High and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares High and Goldman Sachs
The main advantage of trading using opposite FlexShares High and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares High 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 FlexShares High Yield and Goldman Sachs Access 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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