Correlation Between Qs Growth and Goldman Sachs

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

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

Diversification Opportunities for Qs Growth and Goldman Sachs

0.98

Correlation Coefficient

Qs Growth  Goldman Sachs

Almost no diversification

The 3 months correlation between LANIX and Goldman is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Qs Growth Fund and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity and Qs Growth 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 Qs Growth Fund 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 Equity has no effect on the direction of Qs Growth i.e., Qs Growth and Goldman Sachs go up and down completely randomly.

Pair Corralation between Qs Growth and Goldman Sachs

Assuming the 90 days horizon Qs Growth is expected to generate 1.2 times less return on investment than Goldman Sachs. In addition to that, Qs Growth is 1.15 times more volatile than Goldman Sachs Equity. It trades about 0.16 of its total potential returns per unit of risk. Goldman Sachs Equity is currently generating about 0.22 per unit of volatility. If you would invest  1,684  in Goldman Sachs Equity on September 2, 2024 and sell it today you would earn a total of  136.00  from holding Goldman Sachs Equity or generate 8.08% return on investment over 90 days.

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

Qs Growth Fund  vs.  Goldman Sachs Equity

Qs Growth Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Growth Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Qs Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Equity

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Qs Growth and Goldman Sachs

The main advantage of trading using opposite Qs Growth and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Growth 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 Qs Growth Fund and Goldman Sachs Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.