Correlation Between Aberdeen Ultra and Goldman Sachs

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

Diversification Opportunities for Aberdeen Ultra and Goldman Sachs

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aberdeen and Goldman is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Ultra Short and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Aberdeen 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 Aberdeen Ultra Short 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 Short has no effect on the direction of Aberdeen Ultra i.e., Aberdeen Ultra and Goldman Sachs go up and down completely randomly.

Pair Corralation between Aberdeen Ultra and Goldman Sachs

Assuming the 90 days horizon Aberdeen Ultra Short is not expected to generate positive returns. However, Aberdeen Ultra Short is 1.34 times less risky than Goldman Sachs. It waists most of its returns potential to compensate for thr risk taken. Goldman Sachs is generating about 0.21 per unit of risk. If you would invest  1,035  in Goldman Sachs Short on May 13, 2022 and sell it today you would earn a total of  4.00  from holding Goldman Sachs Short or generate 0.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aberdeen Ultra Short  vs.  Goldman Sachs Short

 Performance (%) 
       Timeline  
Aberdeen Ultra Short 
Aberdeen Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Ultra Short are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aberdeen Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Price Channel

Goldman Sachs Short 
Goldman Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Price Channel

Aberdeen Ultra and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberdeen Ultra and Goldman Sachs

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

Aberdeen Ultra Short

Pair trading matchups for Aberdeen Ultra

Home Bancshares vs. Aberdeen Ultra
Starbucks Corp vs. Aberdeen Ultra
Nasdaq vs. Aberdeen Ultra
Boeing vs. Aberdeen Ultra
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Aberdeen Ultra as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Aberdeen Ultra's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Aberdeen Ultra's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Aberdeen Ultra Short.
The idea behind Aberdeen Ultra Short and Goldman Sachs Short 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.

Goldman Sachs Short

Pair trading matchups for Goldman Sachs

Boeing vs. Goldman Sachs
Home Bancshares vs. Goldman Sachs
Nasdaq vs. Goldman Sachs
Starbucks Corp vs. Goldman Sachs
Erie Indemnity vs. Goldman Sachs
Bgc Partners vs. Goldman Sachs
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Goldman Sachs as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Goldman Sachs' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Goldman Sachs' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Goldman Sachs Short.
Check out your portfolio center. 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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