Correlation Between Dow Jones and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Goldman Sachs ETF, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Goldman Sachs.
Diversification Opportunities for Dow Jones and Goldman Sachs
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Goldman is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF and Dow Jones 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 Dow Jones Industrial 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 ETF has no effect on the direction of Dow Jones i.e., Dow Jones and Goldman Sachs go up and down completely randomly.
Pair Corralation between Dow Jones and Goldman Sachs
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.2 times more return on investment than Goldman Sachs. However, Dow Jones is 4.2 times more volatile than Goldman Sachs ETF. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs ETF is currently generating about 0.06 per unit of risk. If you would invest 4,133,505 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 338,701 from holding Dow Jones Industrial or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Goldman Sachs ETF
Performance |
| Timeline |
Dow Jones and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Goldman Sachs ETF
Pair trading matchups for Goldman Sachs
Pair Trading with Dow Jones and Goldman Sachs
The main advantage of trading using opposite Dow Jones and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Goldman Sachs vs. Xtrackers California Municipal | Goldman Sachs vs. IQ MacKay Municipal | Goldman Sachs vs. IQ MacKay Municipal | Goldman Sachs vs. ALPS Intermediate Municipal |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |