Correlation Between SPDR EURO and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both SPDR EURO 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 SPDR EURO and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR EURO STOXX and Goldman Sachs ActiveBeta, you can compare the effects of market volatilities on SPDR EURO 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 SPDR EURO with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR EURO and Goldman Sachs.
Diversification Opportunities for SPDR EURO and Goldman Sachs
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Goldman is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR EURO STOXX and Goldman Sachs ActiveBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ActiveBeta and SPDR EURO 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 SPDR EURO STOXX 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 ActiveBeta has no effect on the direction of SPDR EURO i.e., SPDR EURO and Goldman Sachs go up and down completely randomly.
Pair Corralation between SPDR EURO and Goldman Sachs
Considering the 90-day investment horizon SPDR EURO STOXX is expected to generate 1.23 times more return on investment than Goldman Sachs. However, SPDR EURO is 1.23 times more volatile than Goldman Sachs ActiveBeta. It trades about 0.05 of its potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about 0.05 per unit of risk. If you would invest 3,828 in SPDR EURO STOXX on September 3, 2024 and sell it today you would earn a total of 1,029 from holding SPDR EURO STOXX or generate 26.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR EURO STOXX vs. Goldman Sachs ActiveBeta
Performance |
| Timeline |
| SPDR EURO STOXX |
| Goldman Sachs ActiveBeta |
SPDR EURO and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR EURO and Goldman Sachs
The main advantage of trading using opposite SPDR EURO and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR EURO 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.| SPDR EURO vs. iShares MSCI Eurozone | SPDR EURO vs. iShares MSCI Germany | SPDR EURO vs. iShares MSCI United | SPDR EURO vs. iShares Europe ETF |
| Goldman Sachs vs. Vanguard FTSE Pacific | Goldman Sachs vs. Vanguard FTSE Emerging | Goldman Sachs vs. Vanguard FTSE All World | Goldman Sachs vs. Vanguard FTSE Developed |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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