Correlation Between Barloworld and Goldman Sachs

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

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

Diversification Opportunities for Barloworld and Goldman Sachs

-0.19

Correlation Coefficient

Barloworld  Goldman Sachs

Good diversification

The 3 months correlation between Barloworld and Goldman is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern and Barloworld 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 Barloworld Ltd ADR 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 Intern has no effect on the direction of Barloworld i.e., Barloworld and Goldman Sachs go up and down completely randomly.

Pair Corralation between Barloworld and Goldman Sachs

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 5.78 times more return on investment than Goldman Sachs. However, Barloworld is 5.78 times more volatile than Goldman Sachs International. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs International is currently generating about 0.09 per unit of risk. If you would invest  354.00  in Barloworld Ltd ADR on February 15, 2024 and sell it today you would earn a total of  80.00  from holding Barloworld Ltd ADR or generate 22.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Goldman Sachs International

Barloworld ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Goldman Sachs Intern

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Barloworld and Goldman Sachs

The main advantage of trading using opposite Barloworld and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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 Barloworld Ltd ADR and Goldman Sachs International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..