Correlation Between Goldman Sachs and IShares IV

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

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

Diversification Opportunities for Goldman Sachs and IShares IV

-0.37

Correlation Coefficient

Goldman Sachs  IShares IV

Very good diversification

The 3 months correlation between Goldman and IShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs SP and iShares IV Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares IV Public 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 SP are associated (or correlated) with IShares IV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares IV Public has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares IV go up and down completely randomly.

Pair Corralation between Goldman Sachs and IShares IV

Given the investment horizon of 90 days Goldman Sachs SP is expected to generate 0.95 times more return on investment than IShares IV. However, Goldman Sachs SP is 1.06 times less risky than IShares IV. It trades about 0.14 of its potential returns per unit of risk. iShares IV Public is currently generating about -0.09 per unit of risk. If you would invest  4,789  in Goldman Sachs SP on September 26, 2024 and sell it today you would earn a total of  271.00  from holding Goldman Sachs SP or generate 5.66% return on investment over 90 days.

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

Goldman Sachs SP  vs.  iShares IV Public

Goldman Sachs SP

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares IV Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares IV Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares IV is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Goldman Sachs and IShares IV

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

The idea behind Goldman Sachs SP and iShares IV Public 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.