Correlation Between WisdomTree Natural and Goldman Sachs

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

By analyzing existing cross correlation between WisdomTree Natural Gas and Goldman Sachs ActiveBeta, you can compare the effects of market volatilities on WisdomTree Natural 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 WisdomTree Natural with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Goldman Sachs.

Diversification Opportunities for WisdomTree Natural and Goldman Sachs

0.15

Correlation Coefficient

WisdomTree Natural  Goldman Sachs

Average diversification

The 3 months correlation between WisdomTree and Goldman is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas 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 WisdomTree Natural 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 WisdomTree Natural Gas 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 WisdomTree Natural i.e., WisdomTree Natural and Goldman Sachs go up and down completely randomly.

Pair Corralation between WisdomTree Natural and Goldman Sachs

Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 4.08 times more return on investment than Goldman Sachs. However, WisdomTree Natural is 4.08 times more volatile than Goldman Sachs ActiveBeta. It trades about 0.19 of its potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about -0.15 per unit of risk. If you would invest  48,150  in WisdomTree Natural Gas on September 2, 2024 and sell it today you would earn a total of  7,365  from holding WisdomTree Natural Gas or generate 15.3% return on investment over 90 days.

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

WisdomTree Natural Gas  vs.  Goldman Sachs ActiveBeta

WisdomTree Natural Gas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Natural Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Natural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs ActiveBeta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Natural and Goldman Sachs

The main advantage of trading using opposite WisdomTree Natural and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural 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 WisdomTree Natural Gas 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.