Correlation Between Goldman Sachs and Kinetics Internet

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

Diversification Opportunities for Goldman Sachs and Kinetics Internet

-0.89

Correlation Coefficient

Goldman Sachs  Kinetics Internet

Pay attention - limited upside

The 3 months correlation between Goldman and Kinetics is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Kinetics Internet Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Internet 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 Kinetics Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Internet has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Kinetics Internet go up and down completely randomly.

Pair Corralation between Goldman Sachs and Kinetics Internet

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Kinetics Internet. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Clean is 1.72 times less risky than Kinetics Internet. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Kinetics Internet Fund is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  5,680  in Kinetics Internet Fund on August 31, 2024 and sell it today you would earn a total of  2,927  from holding Kinetics Internet Fund or generate 51.53% return on investment over 90 days.

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

Goldman Sachs Clean  vs.  Kinetics Internet Fund

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 latest weak performance, the Fund's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Kinetics Internet

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Internet Fund are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Internet showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Kinetics Internet

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

The idea behind Goldman Sachs Clean and Kinetics Internet Fund 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.