Correlation Between MicroStrategy Incorporated and Goldman Sachs

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

By analyzing existing cross correlation between MicroStrategy Incorporated 1000 and Goldman Sachs Technology, you can compare the effects of market volatilities on MicroStrategy Incorporated 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 MicroStrategy Incorporated with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroStrategy Incorporated and Goldman Sachs.

Diversification Opportunities for MicroStrategy Incorporated and Goldman Sachs

0.65

Correlation Coefficient

MicroStrategy Incorporated  Goldman Sachs

Poor diversification

The 3 months correlation between MicroStrategy and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated 100 and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and MicroStrategy Incorporated 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 MicroStrategy Incorporated 1000 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 Technology has no effect on the direction of MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Goldman Sachs go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Goldman Sachs

Given the investment horizon of 90 days MicroStrategy Incorporated 1000 is expected to generate 1.75 times more return on investment than Goldman Sachs. However, MicroStrategy Incorporated is 1.75 times more volatile than Goldman Sachs Technology. It trades about 0.27 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.35 per unit of risk. If you would invest  8,916  in MicroStrategy Incorporated 1000 on April 24, 2025 and sell it today you would earn a total of  2,984  from holding MicroStrategy Incorporated 1000 or generate 33.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MicroStrategy Incorporated 100  vs.  Goldman Sachs Technology

MicroStrategy Incorporated

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated 1000 are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Technology

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroStrategy Incorporated and Goldman Sachs

The main advantage of trading using opposite MicroStrategy Incorporated and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroStrategy Incorporated 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 MicroStrategy Incorporated 1000 and Goldman Sachs Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.