Correlation Between SPDR Kensho and Goldman Sachs

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

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

Diversification Opportunities for SPDR Kensho and Goldman Sachs

-0.61

Correlation Coefficient

SPDR Kensho  Goldman Sachs

Excellent diversification

The 3 months correlation between SPDR and Goldman is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and SPDR Kensho 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 SPDR Kensho New 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 Future has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and Goldman Sachs go up and down completely randomly.

Pair Corralation between SPDR Kensho and Goldman Sachs

Given the investment horizon of 90 days SPDR Kensho New is expected to generate 1.59 times more return on investment than Goldman Sachs. However, SPDR Kensho is 1.59 times more volatile than Goldman Sachs Future. It trades about 0.22 of its potential returns per unit of risk. Goldman Sachs Future is currently generating about -0.02 per unit of risk. If you would invest  4,665  in SPDR Kensho New on September 3, 2024 and sell it today you would earn a total of  785.00  from holding SPDR Kensho New or generate 16.83% return on investment over 90 days.

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

SPDR Kensho New  vs.  Goldman Sachs Future

SPDR Kensho New

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho New are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, SPDR Kensho reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SPDR Kensho and Goldman Sachs

The main advantage of trading using opposite SPDR Kensho and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho 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 SPDR Kensho New and Goldman Sachs Future 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..