Correlation Between Matson Money and Goldman Sachs

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

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

Diversification Opportunities for Matson Money and Goldman Sachs

0.96

Correlation Coefficient

Matson Money  Goldman Sachs

Almost no diversification

The 3 months correlation between Matson and GOLDMAN is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Goldman Sachs Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Growth and Matson Money 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 Matson Money Equity 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 Growth has no effect on the direction of Matson Money i.e., Matson Money and Goldman Sachs go up and down completely randomly.

Pair Corralation between Matson Money and Goldman Sachs

Assuming the 90 days horizon Matson Money is expected to generate 1.43 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Matson Money Equity is 1.03 times less risky than Goldman Sachs. It trades about 0.08 of its potential returns per unit of risk. Goldman Sachs Growth is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,969  in Goldman Sachs Growth on September 3, 2024 and sell it today you would earn a total of  410.00  from holding Goldman Sachs Growth or generate 20.82% return on investment over 90 days.

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

Matson Money Equity  vs.  Goldman Sachs Growth

Matson Money Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matson Money Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Matson Money may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Growth

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Growth are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matson Money and Goldman Sachs

The main advantage of trading using opposite Matson Money and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson Money 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 Matson Money Equity and Goldman Sachs Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.