Correlation Between Goldman Sachs and Virtus Convertible

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Virtus Convertible 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 Virtus Convertible 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 Virtus Convertible, you can compare the effects of market volatilities on Goldman Sachs and Virtus Convertible 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 Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Virtus Convertible.

Diversification Opportunities for Goldman Sachs and Virtus Convertible

-0.8

Correlation Coefficient

Goldman Sachs  Virtus Convertible

Pay attention - limited upside

The 3 months correlation between Goldman and Virtus is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible 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 Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Virtus Convertible go up and down completely randomly.

Pair Corralation between Goldman Sachs and Virtus Convertible

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Virtus Convertible. In addition to that, Goldman Sachs is 1.0 times more volatile than Virtus Convertible. It trades about -0.44 of its total potential returns per unit of risk. Virtus Convertible is currently generating about -0.2 per unit of volatility. If you would invest  3,722  in Virtus Convertible on September 28, 2024 and sell it today you would lose (130.00) from holding Virtus Convertible or give up 3.49% of portfolio value over 90 days.

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

Goldman Sachs Clean  vs.  Virtus Convertible

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.

Virtus Convertible

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Virtus Convertible 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 Virtus Convertible

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

The idea behind Goldman Sachs Clean and Virtus Convertible 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.