Correlation Between Goldman Sachs and SPDR SP

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Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Physical and SPDR SP 500, you can compare the effects of market volatilities on Goldman Sachs and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and SPDR SP.

Diversification Opportunities for Goldman Sachs and SPDR SP

  Correlation Coefficient

Modest diversification

The 3 months correlation between Goldman and SPDR SP is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Physical and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 Physical are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and SPDR SP go up and down completely randomly.

Pair Corralation between Goldman Sachs and SPDR SP

Given the investment horizon of 90 days Goldman Sachs Physical is expected to generate 1.14 times more return on investment than SPDR SP. However, Goldman Sachs is 1.14 times more volatile than SPDR SP 500. It trades about 0.33 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.01 per unit of risk. If you would invest  1,802  in Goldman Sachs Physical on December 27, 2022 and sell it today you would earn a total of  158.00  from holding Goldman Sachs Physical or generate 8.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Goldman Sachs Physical  vs.  SPDR SP 500

 Performance (%) 
Goldman Sachs Physical 

Goldman Performance

10 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Physical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2023.
SPDR SP 500 

SPDR SP Performance

5 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, SPDR SP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs and SPDR SP Volatility Contrast

   Predicted Return Density   

Pair Trading with Goldman Sachs and SPDR SP

The main advantage of trading using opposite Goldman Sachs and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.
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The idea behind Goldman Sachs Physical and SPDR SP 500 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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