Correlation Between Goldman Sachs and Nuveen Dow

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

By analyzing existing cross correlation between Goldman Sachs Future and Nuveen Dow 30Sm, you can compare the effects of market volatilities on Goldman Sachs and Nuveen Dow 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 Nuveen Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Nuveen Dow.

Diversification Opportunities for Goldman Sachs and Nuveen Dow

0.78

Correlation Coefficient

Goldman Sachs  Nuveen Dow

Poor diversification

The 3 months correlation between Goldman and Nuveen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Nuveen Dow 30Sm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dow 30Sm 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 Future are associated (or correlated) with Nuveen Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dow 30Sm has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Nuveen Dow go up and down completely randomly.

Pair Corralation between Goldman Sachs and Nuveen Dow

Given the investment horizon of 90 days Goldman Sachs Future is expected to generate 1.11 times more return on investment than Nuveen Dow. However, Goldman Sachs is 1.11 times more volatile than Nuveen Dow 30Sm. It trades about 0.1 of its potential returns per unit of risk. Nuveen Dow 30Sm is currently generating about 0.02 per unit of risk. If you would invest  3,249  in Goldman Sachs Future on February 20, 2024 and sell it today you would earn a total of  161.40  from holding Goldman Sachs Future or generate 4.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Goldman Sachs Future  vs.  Nuveen Dow 30Sm

Goldman Sachs Future

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Nuveen Dow 30Sm

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dow 30Sm are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nuveen Dow is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Nuveen Dow

The main advantage of trading using opposite Goldman Sachs and Nuveen Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Nuveen Dow 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 Nuveen Dow will offset losses from the drop in Nuveen Dow's long position.

The idea behind Goldman Sachs Future and Nuveen Dow 30Sm 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.