Correlation Between Goldman Sachs and Horizon Us

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

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

Diversification Opportunities for Goldman Sachs and Horizon Us

0.31

Correlation Coefficient

Goldman Sachs  Horizon Us

Weak diversification

The 3 months correlation between Goldman and Horizon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Horizon Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Equity 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 Real are associated (or correlated) with Horizon Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Equity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Horizon Us go up and down completely randomly.

Pair Corralation between Goldman Sachs and Horizon Us

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.3 times less return on investment than Horizon Us. In addition to that, Goldman Sachs is 1.59 times more volatile than Horizon Defensive Equity. It trades about 0.04 of its total potential returns per unit of risk. Horizon Defensive Equity is currently generating about 0.09 per unit of volatility. If you would invest  2,501  in Horizon Defensive Equity on September 3, 2024 and sell it today you would earn a total of  941.00  from holding Horizon Defensive Equity or generate 37.62% 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 Real  vs.  Horizon Defensive Equity

Goldman Sachs Real

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Real are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Horizon Defensive Equity

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Defensive Equity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Horizon Us may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Horizon Us

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

The idea behind Goldman Sachs Real and Horizon Defensive Equity 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.