Correlation Between KraneShares European and Goldman Sachs

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

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

Diversification Opportunities for KraneShares European and Goldman Sachs

-0.38

Correlation Coefficient

KraneShares European  Goldman Sachs

Very good diversification

The 3 months correlation between KraneShares and Goldman is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding KraneShares European Carbon and Goldman Sachs Physical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Physical and KraneShares European 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 KraneShares European Carbon 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 Physical has no effect on the direction of KraneShares European i.e., KraneShares European and Goldman Sachs go up and down completely randomly.

Pair Corralation between KraneShares European and Goldman Sachs

Given the investment horizon of 90 days KraneShares European Carbon is expected to under-perform the Goldman Sachs. In addition to that, KraneShares European is 1.86 times more volatile than Goldman Sachs Physical. It trades about -0.02 of its total potential returns per unit of risk. Goldman Sachs Physical is currently generating about 0.09 per unit of volatility. If you would invest  2,466  in Goldman Sachs Physical on September 3, 2024 and sell it today you would earn a total of  141.00  from holding Goldman Sachs Physical or generate 5.72% return on investment over 90 days.

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

KraneShares European Carbon  vs.  Goldman Sachs Physical

KraneShares European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KraneShares European Carbon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KraneShares European is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Physical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Physical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KraneShares European and Goldman Sachs

The main advantage of trading using opposite KraneShares European and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KraneShares European 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 KraneShares European Carbon and Goldman Sachs Physical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.