Correlation Between Blackrock Midcap and Goldman Sachs

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

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

Diversification Opportunities for Blackrock Midcap and Goldman Sachs

0.69

Correlation Coefficient

Blackrock Midcap  Goldman Sachs

Poor diversification

The 3 months correlation between Blackrock and Goldman is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Midcap Index and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and Blackrock Midcap 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 Blackrock Midcap Index 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 Technology has no effect on the direction of Blackrock Midcap i.e., Blackrock Midcap and Goldman Sachs go up and down completely randomly.

Pair Corralation between Blackrock Midcap and Goldman Sachs

Assuming the 90 days horizon Blackrock Midcap Index is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Midcap Index is 1.26 times less risky than Goldman Sachs. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Goldman Sachs Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,286  in Goldman Sachs Technology on September 25, 2024 and sell it today you would earn a total of  289.00  from holding Goldman Sachs Technology or generate 8.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blackrock Midcap Index  vs.  Goldman Sachs Technology

Blackrock Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Goldman Sachs Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Midcap and Goldman Sachs

The main advantage of trading using opposite Blackrock Midcap and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Midcap 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 Blackrock Midcap Index and Goldman Sachs Technology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.