Correlation Between Xtrackers California and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Xtrackers California 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 Xtrackers California and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and Goldman Sachs Community, you can compare the effects of market volatilities on Xtrackers California 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 Xtrackers California with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Goldman Sachs.
Diversification Opportunities for Xtrackers California and Goldman Sachs
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Goldman is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Goldman Sachs Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Community and Xtrackers California 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 Xtrackers California 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 Community has no effect on the direction of Xtrackers California i.e., Xtrackers California and Goldman Sachs go up and down completely randomly.
Pair Corralation between Xtrackers California and Goldman Sachs
Allowing for the 90-day total investment horizon Xtrackers California is expected to generate 83.28 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Xtrackers California Municipal is 84.71 times less risky than Goldman Sachs. It trades about 0.05 of its potential returns per unit of risk. Goldman Sachs Community is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Goldman Sachs Community on August 26, 2024 and sell it today you would earn a total of 3,969 from holding Goldman Sachs Community or generate 396.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 54.94% |
| Values | Daily Returns |
Xtrackers California Municipal vs. Goldman Sachs Community
Performance |
| Timeline |
| Xtrackers California |
| Goldman Sachs Community |
Xtrackers California and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and Goldman Sachs
The main advantage of trading using opposite Xtrackers California and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California 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.| Xtrackers California vs. SSGA Active Trust | Xtrackers California vs. SPDR Nuveen Municipal | Xtrackers California vs. iShares Short Maturity | Xtrackers California vs. First Trust Flexible |
| Goldman Sachs vs. SSGA Active Trust | Goldman Sachs vs. SPDR Nuveen Municipal | Goldman Sachs vs. Xtrackers California Municipal | Goldman Sachs vs. iShares Short Maturity |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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