Correlation Between Goldman Sachs and Tax Exempt

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

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

Diversification Opportunities for Goldman Sachs and Tax Exempt

0.03

Correlation Coefficient

Goldman Sachs  Tax Exempt

Significant diversification

The 3 months correlation between Goldman and Tax is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Tax Exempt High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt High and Goldman Sachs 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 Goldman Sachs Clean are associated (or correlated) with Tax Exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt High has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Tax Exempt go up and down completely randomly.

Pair Corralation between Goldman Sachs and Tax Exempt

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Tax Exempt. In addition to that, Goldman Sachs is 3.56 times more volatile than Tax Exempt High Yield. It trades about -0.26 of its total potential returns per unit of risk. Tax Exempt High Yield is currently generating about -0.01 per unit of volatility. If you would invest  1,003  in Tax Exempt High Yield on September 16, 2024 and sell it today you would lose (2.00) from holding Tax Exempt High Yield or give up 0.2% of portfolio value over 90 days.

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

Goldman Sachs Clean  vs.  Tax Exempt High Yield

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 weak performance in the last few months, the Fund's fundamental drivers 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.

Tax Exempt High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goldman Sachs and Tax Exempt

The main advantage of trading using opposite Goldman Sachs and Tax Exempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Tax Exempt 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 Tax Exempt will offset losses from the drop in Tax Exempt's long position.

The idea behind Goldman Sachs Clean and Tax Exempt High Yield 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.