Correlation Between Diamond Hill and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Diamond Hill 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 Diamond Hill and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Investment and Goldman Sachs Group, you can compare the effects of market volatilities on Diamond Hill 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 Diamond Hill with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Goldman Sachs.
Diversification Opportunities for Diamond Hill and Goldman Sachs
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diamond and Goldman is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment 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 Diamond Hill 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 Diamond Hill Investment 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 Diamond Hill i.e., Diamond Hill and Goldman Sachs go up and down completely randomly.
Pair Corralation between Diamond Hill and Goldman Sachs
Given the investment horizon of 90 days Diamond Hill is expected to generate 15.45 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Diamond Hill Investment is 1.04 times less risky than Goldman Sachs. It trades about 0.01 of its potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 32,378 in Goldman Sachs Group on August 31, 2024 and sell it today you would earn a total of 28,479 from holding Goldman Sachs Group or generate 87.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. Goldman Sachs Group
Performance |
| Timeline |
| Diamond Hill Investment |
| Goldman Sachs Group |
Diamond Hill and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and Goldman Sachs
The main advantage of trading using opposite Diamond Hill and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill 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.| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |