Correlation Between American Funds and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both American Funds 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 Funds 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 Funds Fundamental and Goldman Sachs MarketBeta, you can compare the effects of market volatilities on American Funds 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 Funds with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Goldman Sachs.
Diversification Opportunities for American Funds and Goldman Sachs
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Goldman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and American Funds 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 Funds Fundamental 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 MarketBeta has no effect on the direction of American Funds i.e., American Funds and Goldman Sachs go up and down completely randomly.
Pair Corralation between American Funds and Goldman Sachs
Assuming the 90 days horizon American Funds Fundamental is expected to generate 1.07 times more return on investment than Goldman Sachs. However, American Funds is 1.07 times more volatile than Goldman Sachs MarketBeta. It trades about 0.14 of its potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about 0.08 per unit of risk. If you would invest 8,194 in American Funds Fundamental on November 4, 2024 and sell it today you would earn a total of 224.00 from holding American Funds Fundamental or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Goldman Sachs MarketBeta
Performance |
| Timeline |
| American Funds Funda |
| Goldman Sachs MarketBeta |
American Funds and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Goldman Sachs
The main advantage of trading using opposite American Funds and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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 Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
| Goldman Sachs vs. JPMorgan Fundamental Data | Goldman Sachs vs. Davis Select International | Goldman Sachs vs. Dimensional ETF Trust | Goldman Sachs vs. Principal Value ETF |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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