Correlation Between Federal Agricultural and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and The Goldman Sachs, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Goldman Sachs.
Diversification Opportunities for Federal Agricultural and Goldman Sachs
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Goldman is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and Goldman Sachs go up and down completely randomly.
Pair Corralation between Federal Agricultural and Goldman Sachs
Assuming the 90 days horizon Federal Agricultural is expected to generate 4.46 times less return on investment than Goldman Sachs. In addition to that, Federal Agricultural is 1.12 times more volatile than The Goldman Sachs. It trades about 0.03 of its total potential returns per unit of risk. The Goldman Sachs is currently generating about 0.14 per unit of volatility. If you would invest 35,345 in The Goldman Sachs on November 1, 2024 and sell it today you would earn a total of 26,415 from holding The Goldman Sachs or generate 74.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. The Goldman Sachs
Performance |
| Timeline |
| Federal Agricultural |
| Goldman Sachs |
Federal Agricultural and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Goldman Sachs
The main advantage of trading using opposite Federal Agricultural and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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.| Federal Agricultural vs. SAN MIGUEL BREWERY | Federal Agricultural vs. National Beverage Corp | Federal Agricultural vs. Thai Beverage Public | Federal Agricultural vs. Gruppo Mutuionline SpA |
| Goldman Sachs vs. Genertec Universal Medical | Goldman Sachs vs. Federal Agricultural Mortgage | Goldman Sachs vs. Inspire Medical Systems | Goldman Sachs vs. DAIRY FARM INTL |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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