Correlation Between IShares IBoxx and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx 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 IBoxx 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 iBoxx Investment and Goldman Sachs ETF, you can compare the effects of market volatilities on IShares IBoxx 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 IBoxx with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Goldman Sachs.
Diversification Opportunities for IShares IBoxx and Goldman Sachs
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF and IShares IBoxx 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 iBoxx Investment 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 ETF has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Goldman Sachs go up and down completely randomly.
Pair Corralation between IShares IBoxx and Goldman Sachs
Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.28 times less return on investment than Goldman Sachs. In addition to that, IShares IBoxx is 1.05 times more volatile than Goldman Sachs ETF. It trades about 0.06 of its total potential returns per unit of risk. Goldman Sachs ETF is currently generating about 0.08 per unit of volatility. If you would invest 3,767 in Goldman Sachs ETF on September 4, 2024 and sell it today you would earn a total of 346.00 from holding Goldman Sachs ETF or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx Investment vs. Goldman Sachs ETF
Performance |
| Timeline |
| iShares iBoxx Investment |
| Goldman Sachs ETF |
IShares IBoxx and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Goldman Sachs
The main advantage of trading using opposite IShares IBoxx and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx 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 IBoxx vs. iShares iBoxx High | IShares IBoxx vs. iShares 1 3 Year | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 7 10 Year |
| Goldman Sachs vs. iShares iBoxx Investment | Goldman Sachs vs. iShares iBoxx High | Goldman Sachs vs. iShares National Muni | Goldman Sachs vs. Invesco Emerging Markets |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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