Correlation Between American Express and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both American Express 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 Express 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 Express and Goldman Sachs Group, you can compare the effects of market volatilities on American Express 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 Express with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Goldman Sachs.
Diversification Opportunities for American Express and Goldman Sachs
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Goldman is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and American Express 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 Express 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 Group has no effect on the direction of American Express i.e., American Express and Goldman Sachs go up and down completely randomly.
Pair Corralation between American Express and Goldman Sachs
Considering the 90-day investment horizon American Express is expected to generate 1.24 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, American Express is 1.58 times less risky than Goldman Sachs. It trades about 0.29 of its potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 52,358 in Goldman Sachs Group on August 28, 2024 and sell it today you would earn a total of 7,945 from holding Goldman Sachs Group or generate 15.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Goldman Sachs Group
Performance |
| Timeline |
| American Express |
| Goldman Sachs Group |
American Express and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Goldman Sachs
The main advantage of trading using opposite American Express and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 Express vs. SLM Corp | American Express vs. Orix Corp Ads | American Express vs. FirstCash | American Express vs. Medallion Financial Corp |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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