Correlation Between Goldman Sachs and STRATS SM

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

By analyzing existing cross correlation between Goldman Sachs Capital and STRATS SM Trust, you can compare the effects of market volatilities on Goldman Sachs and STRATS SM 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 STRATS SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and STRATS SM.

Diversification Opportunities for Goldman Sachs and STRATS SM

0.04

Correlation Coefficient

Goldman Sachs  STRATS SM

Significant diversification

The 3 months correlation between Goldman and STRATS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Capital and STRATS SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATS SM Trust 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 Capital are associated (or correlated) with STRATS SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATS SM Trust has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and STRATS SM go up and down completely randomly.

Pair Corralation between Goldman Sachs and STRATS SM

Considering the 90-day investment horizon Goldman Sachs Capital is expected to under-perform the STRATS SM. In addition to that, Goldman Sachs is 2.45 times more volatile than STRATS SM Trust. It trades about -0.02 of its total potential returns per unit of risk. STRATS SM Trust is currently generating about 0.04 per unit of volatility. If you would invest  2,477  in STRATS SM Trust on August 31, 2024 and sell it today you would earn a total of  22.00  from holding STRATS SM Trust or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Goldman Sachs Capital  vs.  STRATS SM Trust

Goldman Sachs Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

STRATS SM Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRATS SM Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, STRATS SM is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Goldman Sachs and STRATS SM

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

The idea behind Goldman Sachs Capital and STRATS SM Trust 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.