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 Income, 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

-0.8

Correlation Coefficient

Barloworld  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Barloworld and Goldman is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Goldman Sachs Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Me 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 Me 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 under-perform the Goldman Sachs. In addition to that, Barloworld is 4.7 times more volatile than Goldman Sachs Income. It trades about -0.16 of its total potential returns per unit of risk. Goldman Sachs Income is currently generating about 0.06 per unit of volatility. If you would invest  2,487  in Goldman Sachs Income on January 25, 2024 and sell it today you would earn a total of  24.00  from holding Goldman Sachs Income or generate 0.97% return on investment over 90 days.

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

Barloworld Ltd ADR  vs.  Goldman Sachs Income

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Goldman Sachs Me

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Income are ranked lower than 6 (%) 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.

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 Income 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.