Correlation Between Goldman Sachs and Nuveen Minnesota

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

By analyzing existing cross correlation between Goldman Sachs Tax Managed and Nuveen Minnesota Municipal, you can compare the effects of market volatilities on Goldman Sachs and Nuveen Minnesota 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 Nuveen Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Nuveen Minnesota.

Diversification Opportunities for Goldman Sachs and Nuveen Minnesota

0.35

Correlation Coefficient

Goldman Sachs  Nuveen Minnesota

Weak diversification

The 3 months correlation between Goldman and Nuveen is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Tax Managed and Nuveen Minnesota Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Minnesota Mun 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 Tax Managed are associated (or correlated) with Nuveen Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Minnesota Mun has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Nuveen Minnesota go up and down completely randomly.

Pair Corralation between Goldman Sachs and Nuveen Minnesota

Assuming the 90 days horizon Goldman Sachs Tax Managed is expected to generate 3.28 times more return on investment than Nuveen Minnesota. However, Goldman Sachs is 3.28 times more volatile than Nuveen Minnesota Municipal. It trades about 0.14 of its potential returns per unit of risk. Nuveen Minnesota Municipal is currently generating about 0.01 per unit of risk. If you would invest  4,552  in Goldman Sachs Tax Managed on September 18, 2024 and sell it today you would earn a total of  322.00  from holding Goldman Sachs Tax Managed or generate 7.07% return on investment over 90 days.

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

Goldman Sachs Tax Managed  vs.  Nuveen Minnesota Municipal

Goldman Sachs Tax

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Tax Managed are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Minnesota Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Minnesota Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Minnesota 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 Nuveen Minnesota

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

The idea behind Goldman Sachs Tax Managed and Nuveen Minnesota Municipal 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.