Correlation Between VanEck Semiconductor and Goldman Sachs

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

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

Diversification Opportunities for VanEck Semiconductor and Goldman Sachs

0.74

Correlation Coefficient

VanEck Semiconductor  Goldman Sachs

Poor diversification

The 3 months correlation between VanEck and Goldman is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Semiconductor ETF 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 VanEck Semiconductor 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 VanEck Semiconductor ETF 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 VanEck Semiconductor i.e., VanEck Semiconductor and Goldman Sachs go up and down completely randomly.

Pair Corralation between VanEck Semiconductor and Goldman Sachs

Considering the 90-day investment horizon VanEck Semiconductor ETF is expected to under-perform the Goldman Sachs. In addition to that, VanEck Semiconductor is 1.68 times more volatile than Goldman Sachs Future. It trades about -0.01 of its total potential returns per unit of risk. Goldman Sachs Future is currently generating about 0.14 per unit of volatility. If you would invest  2,981  in Goldman Sachs Future on August 30, 2024 and sell it today you would earn a total of  344.00  from holding Goldman Sachs Future or generate 11.54% return on investment over 90 days.

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

VanEck Semiconductor ETF  vs.  Goldman Sachs Future

VanEck Semiconductor ETF

Risk-Adjusted Performance

0 of 100

Weak

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

Goldman Sachs Future

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with VanEck Semiconductor and Goldman Sachs

The main advantage of trading using opposite VanEck Semiconductor and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Semiconductor 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 VanEck Semiconductor ETF 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.