Correlation Between Guidemark Smallmid and Goldman Sachs

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

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

Diversification Opportunities for Guidemark Smallmid and Goldman Sachs

-0.84

Correlation Coefficient

Guidemark Smallmid  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Guidemark and Goldman is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Guidemark Smallmid 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 Guidemark Smallmid Cap are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Clean has no effect on the direction of Guidemark Smallmid i.e., Guidemark Smallmid and Goldman Sachs go up and down completely randomly.

Pair Corralation between Guidemark Smallmid and Goldman Sachs

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to generate 0.99 times more return on investment than Goldman Sachs. However, Guidemark Smallmid Cap is 1.01 times less risky than Goldman Sachs. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.26 per unit of risk. If you would invest  2,074  in Guidemark Smallmid Cap on September 17, 2024 and sell it today you would earn a total of  161.00  from holding Guidemark Smallmid Cap or generate 7.76% return on investment over 90 days.

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

Guidemark Smallmid Cap  vs.  Goldman Sachs Clean

Guidemark Smallmid Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guidemark Smallmid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Guidemark Smallmid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Guidemark Smallmid and Goldman Sachs

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

The idea behind Guidemark Smallmid Cap and Goldman Sachs Clean 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.