Correlation Between Apple and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Goldman Sachs Growth, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Goldman Sachs.
Diversification Opportunities for Apple and Goldman Sachs
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and Goldman is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Goldman Sachs Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Growth and Apple 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 Apple 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 Growth has no effect on the direction of Apple i.e., Apple and Goldman Sachs go up and down completely randomly.
Pair Corralation between Apple and Goldman Sachs
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Goldman Sachs. In addition to that, Apple is 2.54 times more volatile than Goldman Sachs Growth. It trades about -0.31 of its total potential returns per unit of risk. Goldman Sachs Growth is currently generating about -0.1 per unit of volatility. If you would invest 1,587 in Goldman Sachs Growth on December 24, 2024 and sell it today you would lose (25.00) from holding Goldman Sachs Growth or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Goldman Sachs Growth
Performance |
| Timeline |
| Apple Inc |
| Goldman Sachs Growth |
Apple and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Goldman Sachs
The main advantage of trading using opposite Apple and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc and Goldman Sachs Growth 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.| Goldman Sachs vs. American Century Diversified | Goldman Sachs vs. Fidelity Advisor Diversified | Goldman Sachs vs. Oppenheimer International Diversified | Goldman Sachs vs. Diversified Bond Fund |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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