Correlation Between US Commodity and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both US Commodity 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 US Commodity and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Commodity Funds and Goldman Sachs Physical, you can compare the effects of market volatilities on US Commodity 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 US Commodity with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Commodity and Goldman Sachs.
Diversification Opportunities for US Commodity and Goldman Sachs
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ALUM and Goldman is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding US Commodity Funds and Goldman Sachs Physical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Physical and US Commodity 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 US Commodity Funds 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 Physical has no effect on the direction of US Commodity i.e., US Commodity and Goldman Sachs go up and down completely randomly.
Pair Corralation between US Commodity and Goldman Sachs
Given the investment horizon of 90 days US Commodity Funds is expected to under-perform the Goldman Sachs. In addition to that, US Commodity is 2.18 times more volatile than Goldman Sachs Physical. It trades about -0.01 of its total potential returns per unit of risk. Goldman Sachs Physical is currently generating about 0.1 per unit of volatility. If you would invest 2,323 in Goldman Sachs Physical on September 1, 2024 and sell it today you would earn a total of 307.00 from holding Goldman Sachs Physical or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.23% |
| Values | Daily Returns |
US Commodity Funds vs. Goldman Sachs Physical
Performance |
| Timeline |
| US Commodity Funds |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Goldman Sachs Physical |
US Commodity and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Commodity and Goldman Sachs
The main advantage of trading using opposite US Commodity and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Commodity 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.| US Commodity vs. Goldman Sachs Physical | US Commodity vs. iShares Gold Trust | US Commodity vs. iShares Bloomberg Roll |
| Goldman Sachs vs. MicroSectors Gold 3X | Goldman Sachs vs. Franklin Responsibly Sourced | Goldman Sachs vs. ProShares Ultra Silver | Goldman Sachs vs. GraniteShares Gold Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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