Correlation Between Goldman Sachs and Horizon Technology

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

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

Diversification Opportunities for Goldman Sachs and Horizon Technology

-0.82

Correlation Coefficient

Goldman Sachs  Horizon Technology

Pay attention - limited upside

The 3 months correlation between Goldman and Horizon is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology 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 Group are associated (or correlated) with Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Horizon Technology go up and down completely randomly.

Pair Corralation between Goldman Sachs and Horizon Technology

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.0 times more return on investment than Horizon Technology. However, Goldman Sachs Group is 1.0 times less risky than Horizon Technology. It trades about 0.08 of its potential returns per unit of risk. Horizon Technology Finance is currently generating about -0.01 per unit of risk. If you would invest  35,091  in Goldman Sachs Group on September 27, 2024 and sell it today you would earn a total of  23,188  from holding Goldman Sachs Group or generate 66.08% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Horizon Technology Finance

Goldman Sachs Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Horizon Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Technology Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Goldman Sachs and Horizon Technology

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

The idea behind Goldman Sachs Group and Horizon Technology Finance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..