Correlation Between American Century and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both American Century 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 American Century and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century High and Goldman Sachs E, you can compare the effects of market volatilities on American Century 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 American Century with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Goldman Sachs.
Diversification Opportunities for American Century and Goldman Sachs
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Goldman is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Century High and Goldman Sachs E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs E and American Century 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 American Century High 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 E has no effect on the direction of American Century i.e., American Century and Goldman Sachs go up and down completely randomly.
Pair Corralation between American Century and Goldman Sachs
Assuming the 90 days horizon American Century is expected to generate 1.92 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, American Century High is 2.59 times less risky than Goldman Sachs. It trades about 0.23 of its potential returns per unit of risk. Goldman Sachs E is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 908.00 in Goldman Sachs E on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Goldman Sachs E or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century High vs. Goldman Sachs E
Performance |
| Timeline |
| American Century High |
| Goldman Sachs E |
American Century and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Goldman Sachs
The main advantage of trading using opposite American Century and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century 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.| American Century vs. Tekla Healthcare Opportunities | American Century vs. Invesco Global Health | American Century vs. Health Care Fund | American Century vs. Live Oak Health |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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