Correlation Between Fidelity Asset and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Fidelity Asset 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 Fidelity Asset and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Asset Manager and Goldman Sachs Technology, you can compare the effects of market volatilities on Fidelity Asset 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 Fidelity Asset with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Goldman Sachs.
Diversification Opportunities for Fidelity Asset and Goldman Sachs
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Goldman is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Asset Manager and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and Fidelity Asset 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 Fidelity Asset Manager 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 Technology has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Goldman Sachs go up and down completely randomly.
Pair Corralation between Fidelity Asset and Goldman Sachs
Assuming the 90 days horizon Fidelity Asset is expected to generate 3.05 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Fidelity Asset Manager is 4.92 times less risky than Goldman Sachs. It trades about 0.14 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,561 in Goldman Sachs Technology on November 4, 2024 and sell it today you would earn a total of 83.00 from holding Goldman Sachs Technology or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Asset Manager vs. Goldman Sachs Technology
Performance |
| Timeline |
| Fidelity Asset Manager |
| Goldman Sachs Technology |
Fidelity Asset and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Asset and Goldman Sachs
The main advantage of trading using opposite Fidelity Asset and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset 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.The idea behind Fidelity Asset Manager and Goldman Sachs Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.
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