Correlation Between IShares Trust and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Goldman Sachs Access, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Goldman Sachs.
Diversification Opportunities for IShares Trust and Goldman Sachs
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Goldman is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Goldman Sachs go up and down completely randomly.
Pair Corralation between IShares Trust and Goldman Sachs
Given the investment horizon of 90 days IShares Trust is expected to generate 2.56 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, iShares Trust is 1.22 times less risky than Goldman Sachs. It trades about 0.02 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,886 in Goldman Sachs Access on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Goldman Sachs Access or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Goldman Sachs Access
Performance |
| Timeline |
| iShares Trust |
| Goldman Sachs Access |
IShares Trust and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Goldman Sachs
The main advantage of trading using opposite IShares Trust and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. Vanguard Short Term Inflation Protected | IShares Trust vs. iShares TIPS Bond | IShares Trust vs. Invesco PureBeta 0 5 | IShares Trust vs. Goldman Sachs Access |
| Goldman Sachs vs. SPDR Bloomberg 1 10 | Goldman Sachs vs. PIMCO Broad TIPS | Goldman Sachs vs. SPDR Portfolio TIPS | Goldman Sachs vs. FlexShares iBoxx 5 Year |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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