Correlation Between Investec Emerging and Goldman Sachs

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

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

Diversification Opportunities for Investec Emerging and Goldman Sachs

0.01

Correlation Coefficient

Investec Emerging  Goldman Sachs

Significant diversification

The 3 months correlation between Investec and Goldman is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets 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 Investec Emerging 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 Investec Emerging Markets 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 Investec Emerging i.e., Investec Emerging and Goldman Sachs go up and down completely randomly.

Pair Corralation between Investec Emerging and Goldman Sachs

Assuming the 90 days horizon Investec Emerging is expected to generate 3.28 times less return on investment than Goldman Sachs. In addition to that, Investec Emerging is 1.33 times more volatile than Goldman Sachs Tax Managed. It trades about 0.03 of its total potential returns per unit of risk. Goldman Sachs Tax Managed is currently generating about 0.14 per unit of volatility. If you would invest  4,594  in Goldman Sachs Tax Managed on September 14, 2024 and sell it today you would earn a total of  325.00  from holding Goldman Sachs Tax Managed or generate 7.07% return on investment over 90 days.

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

Investec Emerging Markets  vs.  Goldman Sachs Tax Managed

Investec Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

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

Goldman Sachs Tax

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Tax Managed are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Investec Emerging and Goldman Sachs

The main advantage of trading using opposite Investec Emerging and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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 Investec Emerging Markets 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.