Correlation Between Global X and Goldman Sachs

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

By analyzing existing cross correlation between Global X NASDAQ and Goldman Sachs Nasdaq 100, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Goldman Sachs.

Diversification Opportunities for Global X and Goldman Sachs

0.98

Correlation Coefficient

Global X  Goldman Sachs

Almost no diversification

The 3 months correlation between Global and Goldman is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X NASDAQ and Goldman Sachs Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Nasdaq and Global X 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 Global X NASDAQ 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 Nasdaq has no effect on the direction of Global X i.e., Global X and Goldman Sachs go up and down completely randomly.

Pair Corralation between Global X and Goldman Sachs

Given the investment horizon of 90 days Global X is expected to generate 1.58 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Global X NASDAQ is 1.35 times less risky than Goldman Sachs. It trades about 0.17 of its potential returns per unit of risk. Goldman Sachs Nasdaq 100 is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,460  in Goldman Sachs Nasdaq 100 on September 4, 2024 and sell it today you would earn a total of  508.00  from holding Goldman Sachs Nasdaq 100 or generate 11.39% return on investment over 90 days.

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

Global X NASDAQ  vs.  Goldman Sachs Nasdaq 100

Global X NASDAQ

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X NASDAQ are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Nasdaq

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Nasdaq 100 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Goldman Sachs

The main advantage of trading using opposite Global X and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X NASDAQ and Goldman Sachs Nasdaq 100 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.