Correlation Between Schwab International and Goldman Sachs

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

Diversification Opportunities for Schwab International and Goldman Sachs

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between Schwab and Goldman is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Schwab International Equity and Goldman Sachs ActiveBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ActiveBeta and Schwab International 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 Schwab International Equity 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 ActiveBeta has no effect on the direction of Schwab International i.e., Schwab International and Goldman Sachs go up and down completely randomly.

Pair Corralation between Schwab International and Goldman Sachs

Given the investment horizon of 90 days Schwab International Equity is expected to generate 1.02 times more return on investment than Goldman Sachs. However, Schwab International is 1.02 times more volatile than Goldman Sachs ActiveBeta. It trades about 0.03 of its potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about 0.03 per unit of risk. If you would invest  3,389  in Schwab International Equity on December 30, 2023 and sell it today you would earn a total of  513.00  from holding Schwab International Equity or generate 15.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Schwab International Equity  vs.  Goldman Sachs ActiveBeta

 Performance 
       Timeline  
Schwab International 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Schwab International Equity are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Schwab International may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Goldman Sachs ActiveBeta 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ActiveBeta are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Schwab International and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Schwab International and Goldman Sachs

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

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