Correlation Between Goldman Sachs and Fidelity MSCI

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

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

Diversification Opportunities for Goldman Sachs and Fidelity MSCI

-0.66

Correlation Coefficient

Goldman Sachs  Fidelity MSCI

Excellent diversification

The 3 months correlation between Goldman and Fidelity is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Fidelity MSCI Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Financials 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 Future are associated (or correlated) with Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Financials has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Fidelity MSCI go up and down completely randomly.

Pair Corralation between Goldman Sachs and Fidelity MSCI

Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the Fidelity MSCI. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Future is 1.63 times less risky than Fidelity MSCI. The etf trades about -0.02 of its potential returns per unit of risk. The Fidelity MSCI Financials is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,346  in Fidelity MSCI Financials on September 3, 2024 and sell it today you would earn a total of  915.00  from holding Fidelity MSCI Financials or generate 14.42% return on investment over 90 days.

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

Goldman Sachs Future  vs.  Fidelity MSCI Financials

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Fidelity MSCI Financials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity MSCI Financials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Fidelity MSCI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Fidelity MSCI

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

The idea behind Goldman Sachs Future and Fidelity MSCI Financials 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 Transaction History module to view history of all your transactions and understand their impact on performance.