Correlation Between California High-yield and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both California High-yield 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 California High-yield and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Goldman Sachs High, you can compare the effects of market volatilities on California High-yield 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 California High-yield with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Goldman Sachs.
Diversification Opportunities for California High-yield and Goldman Sachs
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Goldman is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Goldman Sachs High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs High and California High-yield 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 California High Yield Municipal 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 High has no effect on the direction of California High-yield i.e., California High-yield and Goldman Sachs go up and down completely randomly.
Pair Corralation between California High-yield and Goldman Sachs
Assuming the 90 days horizon California High-yield is expected to generate 1.21 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, California High Yield Municipal is 1.1 times less risky than Goldman Sachs. It trades about 0.07 of its potential returns per unit of risk. Goldman Sachs High is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 849.00 in Goldman Sachs High on September 1, 2024 and sell it today you would earn a total of 92.00 from holding Goldman Sachs High or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Goldman Sachs High
Performance |
| Timeline |
| California High Yield |
| Goldman Sachs High |
California High-yield and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Goldman Sachs
The main advantage of trading using opposite California High-yield and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield 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.| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |