Correlation Between Goldman Sachs and Alternative Asset

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

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

Diversification Opportunities for Goldman Sachs and Alternative Asset

0.83

Correlation Coefficient

Goldman Sachs  Alternative Asset

Very poor diversification

The 3 months correlation between GOLDMAN and Alternative is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset 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 Large are associated (or correlated) with Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Alternative Asset go up and down completely randomly.

Pair Corralation between Goldman Sachs and Alternative Asset

Assuming the 90 days horizon Goldman Sachs Large is expected to generate 5.21 times more return on investment than Alternative Asset. However, Goldman Sachs is 5.21 times more volatile than Alternative Asset Allocation. It trades about 0.17 of its potential returns per unit of risk. Alternative Asset Allocation is currently generating about 0.15 per unit of risk. If you would invest  3,332  in Goldman Sachs Large on September 2, 2024 and sell it today you would earn a total of  370.00  from holding Goldman Sachs Large or generate 11.1% return on investment over 90 days.

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

Goldman Sachs Large  vs.  Alternative Asset Allocation

Goldman Sachs Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Large are ranked lower than 13 (%) 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.

Alternative Asset

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Asset Allocation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Alternative Asset 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 Alternative Asset

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

The idea behind Goldman Sachs Large and Alternative Asset Allocation 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.