Correlation Between MSCI and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both MSCI 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 MSCI and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI Inc and The Goldman Sachs, you can compare the effects of market volatilities on MSCI 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 MSCI with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI and Goldman Sachs.
Diversification Opportunities for MSCI and Goldman Sachs
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MSCI and Goldman is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and MSCI 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 MSCI Inc 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 has no effect on the direction of MSCI i.e., MSCI and Goldman Sachs go up and down completely randomly.
Pair Corralation between MSCI and Goldman Sachs
Assuming the 90 days horizon MSCI is expected to generate 1.47 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, MSCI Inc is 1.41 times less risky than Goldman Sachs. It trades about 0.12 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 42,052 in The Goldman Sachs on August 25, 2024 and sell it today you would earn a total of 15,778 from holding The Goldman Sachs or generate 37.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSCI Inc vs. The Goldman Sachs
Performance |
| Timeline |
| MSCI Inc |
| Goldman Sachs |
MSCI and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI and Goldman Sachs
The main advantage of trading using opposite MSCI and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI 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.| MSCI vs. USWE SPORTS AB | MSCI vs. NTG Nordic Transport | MSCI vs. Salesforce | MSCI vs. TITANIUM TRANSPORTGROUP |
| Goldman Sachs vs. Macquarie Group Limited | Goldman Sachs vs. MSCI Inc | Goldman Sachs vs. Superior Plus Corp | Goldman Sachs vs. NMI Holdings |
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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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