Correlation Between IShares Intermediate and Goldman Sachs

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

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

Diversification Opportunities for IShares Intermediate and Goldman Sachs

0.9

Correlation Coefficient

IShares Intermediate  Goldman Sachs

Almost no diversification

The 3 months correlation between IShares and Goldman is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access and IShares Intermediate 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 iShares Intermediate GovernmentCredit 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 Access has no effect on the direction of IShares Intermediate i.e., IShares Intermediate and Goldman Sachs go up and down completely randomly.

Pair Corralation between IShares Intermediate and Goldman Sachs

Considering the 90-day investment horizon iShares Intermediate GovernmentCredit is expected to under-perform the Goldman Sachs. In addition to that, IShares Intermediate is 1.41 times more volatile than Goldman Sachs Access. It trades about -0.02 of its total potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.07 per unit of volatility. If you would invest  4,696  in Goldman Sachs Access on September 2, 2024 and sell it today you would earn a total of  27.00  from holding Goldman Sachs Access or generate 0.57% return on investment over 90 days.

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

iShares Intermediate Governmen  vs.  Goldman Sachs Access

iShares Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Goldman Sachs Access

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Access are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Intermediate and Goldman Sachs

The main advantage of trading using opposite IShares Intermediate and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Intermediate 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 iShares Intermediate GovernmentCredit and Goldman Sachs Access 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.