Correlation Between Goldman Sachs and Touchstone Sands

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

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

Diversification Opportunities for Goldman Sachs and Touchstone Sands

-0.62

Correlation Coefficient

Goldman Sachs  Touchstone Sands

Excellent diversification

The 3 months correlation between Goldman and Touchstone is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Small and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital 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 Small are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Touchstone Sands go up and down completely randomly.

Pair Corralation between Goldman Sachs and Touchstone Sands

Assuming the 90 days horizon Goldman Sachs Small is expected to generate 1.55 times more return on investment than Touchstone Sands. However, Goldman Sachs is 1.55 times more volatile than Touchstone Sands Capital. It trades about 0.08 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about -0.02 per unit of risk. If you would invest  6,406  in Goldman Sachs Small on September 15, 2024 and sell it today you would earn a total of  404.00  from holding Goldman Sachs Small or generate 6.31% return on investment over 90 days.

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

Goldman Sachs Small  vs.  Touchstone Sands Capital

Goldman Sachs Small

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Small are ranked lower than 6 (%) 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.

Touchstone Sands Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Sands Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Touchstone Sands 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 Touchstone Sands

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

The idea behind Goldman Sachs Small and Touchstone Sands Capital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.