Correlation Between Global Diversified and Goldman Sachs

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

Diversification Opportunities for Global Diversified and Goldman Sachs

GlobalGoldmanDiversified AwayGlobalGoldmanDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Global and Goldman is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Diversified Income and Goldman Sachs Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Real and Global Diversified 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 Global Diversified Income 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 Real has no effect on the direction of Global Diversified i.e., Global Diversified and Goldman Sachs go up and down completely randomly.

Pair Corralation between Global Diversified and Goldman Sachs

Assuming the 90 days horizon Global Diversified Income is expected to generate 0.57 times more return on investment than Goldman Sachs. However, Global Diversified Income is 1.75 times less risky than Goldman Sachs. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Real is currently generating about -0.03 per unit of risk. If you would invest  1,057  in Global Diversified Income on November 14, 2024 and sell it today you would earn a total of  134.00  from holding Global Diversified Income or generate 12.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Global Diversified Income  vs.  Goldman Sachs Real

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -1.5-1.0-0.50.00.51.0
JavaScript chart by amCharts 3.21.15PGBAX GSREX
       Timeline  
Global Diversified Income 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Global Diversified Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.7511.811.8511.911.95
Goldman Sachs Real 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Goldman Sachs Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.058.18.158.2

Global Diversified and Goldman Sachs Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.53-0.32-0.11-0.0521-0.0024830.04710.10.310.520.73 246810
JavaScript chart by amCharts 3.21.15PGBAX GSREX
       Returns  

Pair Trading with Global Diversified and Goldman Sachs

The main advantage of trading using opposite Global Diversified and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Diversified 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 Global Diversified Income and Goldman Sachs Real 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.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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