Correlation Between Global Gold and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Global Gold 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 Global Gold and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Goldman Sachs Equity, you can compare the effects of market volatilities on Global Gold 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 Global Gold with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Goldman Sachs.
Diversification Opportunities for Global Gold and Goldman Sachs
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Goldman is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity and Global Gold 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 Global Gold Fund 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 Equity has no effect on the direction of Global Gold i.e., Global Gold and Goldman Sachs go up and down completely randomly.
Pair Corralation between Global Gold and Goldman Sachs
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Goldman Sachs. In addition to that, Global Gold is 3.14 times more volatile than Goldman Sachs Equity. It trades about -0.14 of its total potential returns per unit of risk. Goldman Sachs Equity is currently generating about 0.32 per unit of volatility. If you would invest 2,299 in Goldman Sachs Equity on September 3, 2024 and sell it today you would earn a total of 96.00 from holding Goldman Sachs Equity or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Goldman Sachs Equity
Performance |
| Timeline |
| Global Gold Fund |
| Goldman Sachs Equity |
Global Gold and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Goldman Sachs
The main advantage of trading using opposite Global Gold and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold 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.| Global Gold vs. Baird Smallmid Cap | Global Gold vs. The Hartford Small | Global Gold vs. Touchstone Small Cap | Global Gold vs. Small Cap Value |
| Goldman Sachs vs. Artisan Global Unconstrained | Goldman Sachs vs. Commonwealth Global Fund | Goldman Sachs vs. Nationwide Global Equity | Goldman Sachs vs. Siit Global Managed |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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