Correlation Between Goldman Sachs and Guidemark Smallmid

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

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

Diversification Opportunities for Goldman Sachs and Guidemark Smallmid

-0.46

Correlation Coefficient

Goldman Sachs  Guidemark Smallmid

Very good diversification

The 3 months correlation between Goldman and Guidemark is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Government and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap 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 Government are associated (or correlated) with Guidemark Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Guidemark Smallmid go up and down completely randomly.

Pair Corralation between Goldman Sachs and Guidemark Smallmid

Assuming the 90 days horizon Goldman Sachs is expected to generate 2.74 times less return on investment than Guidemark Smallmid. But when comparing it to its historical volatility, Goldman Sachs Government is 3.94 times less risky than Guidemark Smallmid. It trades about 0.03 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,079  in Guidemark Smallmid Cap on September 21, 2024 and sell it today you would earn a total of  48.00  from holding Guidemark Smallmid Cap or generate 2.31% return on investment over 90 days.

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

Goldman Sachs Government  vs.  Guidemark Smallmid Cap

Goldman Sachs Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Government 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 current stock price disturbance, may contribute to short-term losses for the investors.

Guidemark Smallmid Cap

Risk-Adjusted Performance

1 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Guidemark Smallmid 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 Guidemark Smallmid

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

The idea behind Goldman Sachs Government and Guidemark Smallmid Cap 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.