Correlation Between IShares Short and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both IShares Short 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 Short 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 Short Treasury and Goldman Sachs Access, you can compare the effects of market volatilities on IShares Short 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 Short with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and Goldman Sachs.

Diversification Opportunities for IShares Short and Goldman Sachs

0.96

Correlation Coefficient

IShares Short  Goldman Sachs

Almost no diversification

The 3 months correlation between IShares and Goldman is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Treasury 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 Short 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 Short Treasury 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 Short i.e., IShares Short and Goldman Sachs go up and down completely randomly.

Pair Corralation between IShares Short and Goldman Sachs

Considering the 90-day investment horizon IShares Short is expected to generate 1.08 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, iShares Short Treasury is 1.24 times less risky than Goldman Sachs. It trades about 1.14 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.99 of returns per unit of risk over similar time horizon. 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 Short Treasury  vs.  Goldman Sachs Access

iShares Short Treasury

Risk-Adjusted Performance

87 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Treasury are ranked lower than 87 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical indicators, IShares Short is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Short and Goldman Sachs

The main advantage of trading using opposite IShares Short and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short 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 Short Treasury 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.