Correlation Between Redwood Real and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Redwood Real 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 Redwood Real and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Real Estate and Goldman Sachs Gqg, you can compare the effects of market volatilities on Redwood Real 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 Redwood Real with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Real and Goldman Sachs.
Diversification Opportunities for Redwood Real and Goldman Sachs
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Redwood and Goldman is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Real Estate and Goldman Sachs Gqg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Gqg and Redwood Real 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 Redwood Real Estate 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 Gqg has no effect on the direction of Redwood Real i.e., Redwood Real and Goldman Sachs go up and down completely randomly.
Pair Corralation between Redwood Real and Goldman Sachs
Assuming the 90 days horizon Redwood Real is expected to generate 2.11 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Redwood Real Estate is 18.11 times less risky than Goldman Sachs. It trades about 0.58 of its potential returns per unit of risk. Goldman Sachs Gqg is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,805 in Goldman Sachs Gqg on September 12, 2024 and sell it today you would earn a total of 362.00 from holding Goldman Sachs Gqg or generate 20.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwood Real Estate vs. Goldman Sachs Gqg
Performance |
| Timeline |
| Redwood Real Estate |
| Goldman Sachs Gqg |
Redwood Real and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Real and Goldman Sachs
The main advantage of trading using opposite Redwood Real and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Real 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.| Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard 500 Index | Redwood Real vs. Vanguard Total Stock | Redwood Real vs. Vanguard Total Stock |
| Goldman Sachs vs. Redwood Real Estate | Goldman Sachs vs. Guggenheim Risk Managed | Goldman Sachs vs. Franklin Real Estate | Goldman Sachs vs. Jhancock Real Estate |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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