Correlation Between Goehring Rozencwajg and Goldman Sachs

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

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

Diversification Opportunities for Goehring Rozencwajg and Goldman Sachs

0.77

Correlation Coefficient

Goehring Rozencwajg  Goldman Sachs

Poor diversification

The 3 months correlation between Goehring and Goldman is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Goehring Rozencwajg Resources and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity and Goehring Rozencwajg 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 Goehring Rozencwajg Resources 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 Equity has no effect on the direction of Goehring Rozencwajg i.e., Goehring Rozencwajg and Goldman Sachs go up and down completely randomly.

Pair Corralation between Goehring Rozencwajg and Goldman Sachs

Assuming the 90 days horizon Goehring Rozencwajg Resources is expected to generate 1.06 times more return on investment than Goldman Sachs. However, Goehring Rozencwajg is 1.06 times more volatile than Goldman Sachs Equity. It trades about -0.07 of its potential returns per unit of risk. Goldman Sachs Equity is currently generating about -0.14 per unit of risk. If you would invest  1,383  in Goehring Rozencwajg Resources on September 12, 2024 and sell it today you would lose (29.00) from holding Goehring Rozencwajg Resources or give up 2.1% of portfolio value over 90 days.

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

Goehring Rozencwajg Resources  vs.  Goldman Sachs Equity

Goehring Rozencwajg

Risk-Adjusted Performance

9 of 100

Good

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

Goldman Sachs Equity

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Equity are ranked lower than 1 (%) of all funds and portfolios of funds 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.

Pair Trading with Goehring Rozencwajg and Goldman Sachs

The main advantage of trading using opposite Goehring Rozencwajg and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goehring Rozencwajg 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 Goehring Rozencwajg Resources and Goldman Sachs 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.