Correlation Between Vanguard Total and Goldman Sachs

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

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

Diversification Opportunities for Vanguard Total and Goldman Sachs

0.99

Correlation Coefficient

Vanguard Total  Goldman Sachs

No risk reduction

The 3 months correlation between Vanguard and Goldman is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Goldman Sachs Tax Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Tax and Vanguard Total 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 Vanguard Total Stock 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 Tax has no effect on the direction of Vanguard Total i.e., Vanguard Total and Goldman Sachs go up and down completely randomly.

Pair Corralation between Vanguard Total and Goldman Sachs

Assuming the 90 days horizon Vanguard Total is expected to generate 1.09 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Vanguard Total Stock is 1.08 times less risky than Goldman Sachs. It trades about 0.2 of its potential returns per unit of risk. Goldman Sachs Tax Managed is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,429  in Goldman Sachs Tax Managed on September 12, 2024 and sell it today you would earn a total of  426.00  from holding Goldman Sachs Tax Managed or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.83%
Values	Daily Returns

Vanguard Total Stock  vs.  Goldman Sachs Tax Managed

Vanguard Total Stock

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Tax

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Tax Managed are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Total and Goldman Sachs

The main advantage of trading using opposite Vanguard Total and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total Stock and Goldman Sachs Tax Managed 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.