Correlation Between Short Duration and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Short Duration 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 Short Duration and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Short Duration Inflation and Goldman Sachs Financial, you can compare the effects of market volatilities on Short Duration 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 Short Duration with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Goldman Sachs.

Diversification Opportunities for Short Duration and Goldman Sachs

0.0

Correlation Coefficient

Short Duration  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Short and Goldman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Goldman Sachs Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Financial and Short Duration 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 Short Duration Inflation 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 Financial has no effect on the direction of Short Duration i.e., Short Duration and Goldman Sachs go up and down completely randomly.

Pair Corralation between Short Duration and Goldman Sachs

Assuming the 90 days horizon Short Duration Inflation is expected to generate 0.75 times more return on investment than Goldman Sachs. However, Short Duration Inflation is 1.34 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Financial is currently generating about 0.08 per unit of risk. If you would invest  1,007  in Short Duration Inflation on September 13, 2024 and sell it today you would earn a total of  49.00  from holding Short Duration Inflation or generate 4.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Short Duration Inflation  vs.  Goldman Sachs Financial

Short Duration Inflation

Risk-Adjusted Performance

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Insignificant

Over the last 90 days Short Duration Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Short Duration and Goldman Sachs

The main advantage of trading using opposite Short Duration and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration 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 Short Duration Inflation and Goldman Sachs Financial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.