Correlation Between Fabwx and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Fabwx 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 Fabwx and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabwx and Goldman Sachs Clean, you can compare the effects of market volatilities on Fabwx 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 Fabwx with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabwx and Goldman Sachs.
Diversification Opportunities for Fabwx and Goldman Sachs
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fabwx and Goldman is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fabwx and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Fabwx 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 Fabwx 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 Clean has no effect on the direction of Fabwx i.e., Fabwx and Goldman Sachs go up and down completely randomly.
Pair Corralation between Fabwx and Goldman Sachs
Assuming the 90 days horizon Fabwx is expected to under-perform the Goldman Sachs. In addition to that, Fabwx is 1.3 times more volatile than Goldman Sachs Clean. It trades about -0.31 of its total potential returns per unit of risk. Goldman Sachs Clean is currently generating about 0.18 per unit of volatility. If you would invest 810.00 in Goldman Sachs Clean on December 8, 2024 and sell it today you would earn a total of 29.00 from holding Goldman Sachs Clean or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabwx vs. Goldman Sachs Clean
Performance |
| Timeline |
| Fabwx |
| Goldman Sachs Clean |
Fabwx and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabwx and Goldman Sachs
The main advantage of trading using opposite Fabwx and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabwx 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.| Fabwx vs. Small Midcap Dividend Income | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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