Correlation Between Gabelli Healthcare and Goldman Sachs

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

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

Diversification Opportunities for Gabelli Healthcare and Goldman Sachs

-0.34

Correlation Coefficient

Gabelli Healthcare  Goldman Sachs

Very good diversification

The 3 months correlation between Gabelli and Goldman is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and Goldman Sachs Tax Advantaged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Tax and Gabelli Healthcare 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 The Gabelli Healthcare 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 Gabelli Healthcare i.e., Gabelli Healthcare and Goldman Sachs go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Goldman Sachs

Assuming the 90 days horizon The Gabelli Healthcare is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Gabelli Healthcare is 1.06 times less risky than Goldman Sachs. The mutual fund trades about -0.52 of its potential returns per unit of risk. The Goldman Sachs Tax Advantaged is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,607  in Goldman Sachs Tax Advantaged on September 29, 2024 and sell it today you would lose (30.00) from holding Goldman Sachs Tax Advantaged or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

The Gabelli Healthcare  vs.  Goldman Sachs Tax Advantaged

The Gabelli Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Goldman Sachs Tax

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Tax Advantaged are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gabelli Healthcare and Goldman Sachs

The main advantage of trading using opposite Gabelli Healthcare and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Healthcare 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 The Gabelli Healthcare and Goldman Sachs Tax Advantaged 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.