Correlation Between Goldman Sachs and Growth Portfolio

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Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Growth Portfolio 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 Goldman Sachs and Growth Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Centrated and Growth Portfolio Class, you can compare the effects of market volatilities on Goldman Sachs and Growth Portfolio 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 Goldman Sachs with a short position of Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Growth Portfolio.

Diversification Opportunities for Goldman Sachs and Growth Portfolio

0.95
  Correlation Coefficient

Almost no diversification

The 12 months correlation between Goldman and Growth is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CENTRATED and GROWTH PORTFOLIO CLASS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class and Goldman Sachs 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 Goldman Sachs Centrated are associated (or correlated) with Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Growth Portfolio go up and down completely randomly.

Pair Corralation between Goldman Sachs and Growth Portfolio

Assuming the 90 days horizon Goldman Sachs Centrated is expected to generate 0.58 times more return on investment than Growth Portfolio. However, Goldman Sachs Centrated is 1.74 times less risky than Growth Portfolio. It trades about 0.1 of its potential returns per unit of risk. Growth Portfolio Class is currently generating about 0.05 per unit of risk. If you would invest  1,380  in Goldman Sachs Centrated on December 29, 2023 and sell it today you would earn a total of  23.00  from holding Goldman Sachs Centrated or generate 1.67% return on investment over 90 days.
Time Period12 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

GOLDMAN SACHS CENTRATED  vs.  GROWTH PORTFOLIO CLASS

 Performance 
       Timeline  
Goldman Sachs Centrated 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Centrated are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Growth Portfolio Class 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Portfolio Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Growth Portfolio may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Goldman Sachs and Growth Portfolio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goldman Sachs and Growth Portfolio

The main advantage of trading using opposite Goldman Sachs and Growth Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Growth Portfolio 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 Growth Portfolio will offset losses from the drop in Growth Portfolio's long position.
The idea behind Goldman Sachs Centrated and Growth Portfolio Class 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.
Check out your portfolio center.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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