Correlation Between Columbia Real and Goldman Sachs

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

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

Diversification Opportunities for Columbia Real and Goldman Sachs

0.48

Correlation Coefficient

Columbia Real  Goldman Sachs

Very weak diversification

The 3 months correlation between Columbia and Goldman is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Real Estate and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Columbia Real 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 Columbia Real Estate 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 Clean has no effect on the direction of Columbia Real i.e., Columbia Real and Goldman Sachs go up and down completely randomly.

Pair Corralation between Columbia Real and Goldman Sachs

Assuming the 90 days horizon Columbia Real Estate is expected to generate 0.89 times more return on investment than Goldman Sachs. However, Columbia Real Estate is 1.13 times less risky than Goldman Sachs. It trades about -0.08 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.3 per unit of risk. If you would invest  1,062  in Columbia Real Estate on September 26, 2024 and sell it today you would lose (57.00) from holding Columbia Real Estate or give up 5.37% of portfolio value over 90 days.

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

Columbia Real Estate  vs.  Goldman Sachs Clean

Columbia Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of fragile performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Columbia Real and Goldman Sachs

The main advantage of trading using opposite Columbia Real and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Real 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 Columbia Real Estate and Goldman Sachs Clean 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.