Correlation Between IShares Ultra and Goldman Sachs

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

By analyzing existing cross correlation between iShares Ultra Short Term and Goldman Sachs Access, you can compare the effects of market volatilities on IShares Ultra 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 IShares Ultra with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Ultra and Goldman Sachs.

Diversification Opportunities for IShares Ultra and Goldman Sachs

1.0

Correlation Coefficient

IShares Ultra  Goldman Sachs

No risk reduction

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

Pair Corralation between IShares Ultra and Goldman Sachs

Given the investment horizon of 90 days IShares Ultra is expected to generate 1.01 times less return on investment than Goldman Sachs. In addition to that, IShares Ultra is 1.51 times more volatile than Goldman Sachs Access. It trades about 0.61 of its total potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.93 per unit of volatility. If you would invest  9,937  in Goldman Sachs Access on February 7, 2024 and sell it today you would earn a total of  38.00  from holding Goldman Sachs Access or generate 0.38% return on investment over 90 days.

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

iShares Ultra Short Term  vs.  Goldman Sachs Access

iShares Ultra Short

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ultra Short Term are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Ultra is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Goldman Sachs Access

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Access are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Ultra and Goldman Sachs

The main advantage of trading using opposite IShares Ultra and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Ultra 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 iShares Ultra Short Term and Goldman Sachs Access 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.