Correlation Between High Yield and Goldman Sachs

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

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

Diversification Opportunities for High Yield and Goldman Sachs

0.99

Correlation Coefficient

High Yield  Goldman Sachs

No risk reduction

The 3 months correlation between High and Goldman is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund Investor and Goldman Sachs High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs High and High Yield 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 High Yield Fund Investor 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 High has no effect on the direction of High Yield i.e., High Yield and Goldman Sachs go up and down completely randomly.

Pair Corralation between High Yield and Goldman Sachs

Assuming the 90 days horizon High Yield is expected to generate 1.36 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, High Yield Fund Investor is 1.06 times less risky than Goldman Sachs. It trades about 0.28 of its potential returns per unit of risk. Goldman Sachs High is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  538.00  in Goldman Sachs High on April 17, 2025 and sell it today you would earn a total of  28.00  from holding Goldman Sachs High or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

High Yield Fund Investor  vs.  Goldman Sachs High

High Yield Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Fund Investor are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs High

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs High are ranked lower than 28 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with High Yield and Goldman Sachs

The main advantage of trading using opposite High Yield and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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 High Yield Fund Investor and Goldman Sachs High 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.