Correlation Between Wells Fargo and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Advantage and Goldman Sachs Mid, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Goldman Sachs.
Diversification Opportunities for Wells Fargo and Goldman Sachs
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wells and Goldman is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Goldman Sachs Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mid and Wells Fargo 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 Wells Fargo Advantage 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 Mid has no effect on the direction of Wells Fargo i.e., Wells Fargo and Goldman Sachs go up and down completely randomly.
Pair Corralation between Wells Fargo and Goldman Sachs
Assuming the 90 days horizon Wells Fargo Advantage is expected to under-perform the Goldman Sachs. In addition to that, Wells Fargo is 2.25 times more volatile than Goldman Sachs Mid. It trades about -0.01 of its total potential returns per unit of risk. Goldman Sachs Mid is currently generating about 0.19 per unit of volatility. If you would invest 3,096 in Goldman Sachs Mid on August 31, 2024 and sell it today you would earn a total of 208.00 from holding Goldman Sachs Mid or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Goldman Sachs Mid
Performance |
| Timeline |
| Wells Fargo Advantage |
| Goldman Sachs Mid |
Wells Fargo and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Goldman Sachs
The main advantage of trading using opposite Wells Fargo and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Touchstone Small Cap | Wells Fargo vs. Kinetics Small Cap | Wells Fargo vs. Small Midcap Dividend Income | Wells Fargo vs. Fisher Small Cap |
| Goldman Sachs vs. Ab Select Equity | Goldman Sachs vs. Locorr Dynamic Equity | Goldman Sachs vs. Us Strategic Equity | Goldman Sachs vs. Us Vector Equity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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