Correlation Between American Mutual and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both American Mutual 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 Mutual 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 Mutual Fund and Goldman Sachs Income, you can compare the effects of market volatilities on American Mutual 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 Mutual with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Goldman Sachs.
Diversification Opportunities for American Mutual and Goldman Sachs
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Goldman is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Goldman Sachs Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Income and American Mutual 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 Mutual 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 Income has no effect on the direction of American Mutual i.e., American Mutual and Goldman Sachs go up and down completely randomly.
Pair Corralation between American Mutual and Goldman Sachs
Assuming the 90 days horizon American Mutual Fund is expected to generate 1.52 times more return on investment than Goldman Sachs. However, American Mutual is 1.52 times more volatile than Goldman Sachs Income. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Income is currently generating about 0.09 per unit of risk. If you would invest 4,606 in American Mutual Fund on September 5, 2024 and sell it today you would earn a total of 1,398 from holding American Mutual Fund or generate 30.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
American Mutual Fund vs. Goldman Sachs Income
Performance |
| Timeline |
| American Mutual |
| Goldman Sachs Income |
American Mutual and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Goldman Sachs
The main advantage of trading using opposite American Mutual and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual 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 Mutual vs. Income Fund Of | American Mutual vs. New World Fund | American Mutual vs. American Funds Income | American Mutual vs. American Funds Preservation |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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