Correlation Between Goldman Sachs and Loomis Sayles

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

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

Diversification Opportunities for Goldman Sachs and Loomis Sayles

1.0

Correlation Coefficient

Goldman Sachs  Loomis Sayles

No risk reduction

The 3 months correlation between Goldman and Loomis is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and Loomis Sayles Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Inflation 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 Inflation are associated (or correlated) with Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Inflation has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Loomis Sayles go up and down completely randomly.

Pair Corralation between Goldman Sachs and Loomis Sayles

Assuming the 90 days horizon Goldman Sachs Inflation is expected to generate 1.0 times more return on investment than Loomis Sayles. However, Goldman Sachs Inflation is 1.0 times less risky than Loomis Sayles. It trades about -0.04 of its potential returns per unit of risk. Loomis Sayles Inflation is currently generating about -0.05 per unit of risk. If you would invest  964.00  in Goldman Sachs Inflation on September 13, 2024 and sell it today you would lose (4.00) from holding Goldman Sachs Inflation or give up 0.41% of portfolio value over 90 days.

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

Goldman Sachs Inflation  vs.  Loomis Sayles Inflation

Goldman Sachs Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Loomis Sayles Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Goldman Sachs Inflation and Loomis Sayles Inflation 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.