Correlation Between First Trust and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust BuyWrite and Goldman Sachs Nasdaq 100, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Goldman Sachs.
Diversification Opportunities for First Trust and Goldman Sachs
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Goldman is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust BuyWrite and Goldman Sachs Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Nasdaq and First Trust 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 First Trust BuyWrite 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 Nasdaq has no effect on the direction of First Trust i.e., First Trust and Goldman Sachs go up and down completely randomly.
Pair Corralation between First Trust and Goldman Sachs
Given the investment horizon of 90 days First Trust is expected to generate 1.75 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, First Trust BuyWrite is 1.6 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Nasdaq 100 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,479 in Goldman Sachs Nasdaq 100 on August 30, 2024 and sell it today you would earn a total of 1,413 from holding Goldman Sachs Nasdaq 100 or generate 40.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 55.56% |
| Values | Daily Returns |
First Trust BuyWrite vs. Goldman Sachs Nasdaq 100
Performance |
| Timeline |
| First Trust BuyWrite |
| Goldman Sachs Nasdaq |
First Trust and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Goldman Sachs
The main advantage of trading using opposite First Trust and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Emerging | First Trust vs. First Trust Managed | First Trust vs. First Trust Senior | First Trust vs. First Trust Income |
| Goldman Sachs vs. Freedom Day Dividend | Goldman Sachs vs. Franklin Templeton ETF | Goldman Sachs vs. iShares MSCI China | Goldman Sachs vs. Tidal Trust II |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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