Correlation Between Goldman Sachs and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Hennessy Small 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 Goldman Sachs and Hennessy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Financial and Hennessy Small Cap, you can compare the effects of market volatilities on Goldman Sachs and Hennessy Small 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 Goldman Sachs with a short position of Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Hennessy Small.
Diversification Opportunities for Goldman Sachs and Hennessy Small
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Goldman and Hennessy is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Financial and Hennessy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Small Cap and Goldman Sachs 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 Goldman Sachs Financial are associated (or correlated) with Hennessy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Small Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Hennessy Small go up and down completely randomly.
Pair Corralation between Goldman Sachs and Hennessy Small
Assuming the 90 days horizon Goldman Sachs is expected to generate 18.24 times less return on investment than Hennessy Small. But when comparing it to its historical volatility, Goldman Sachs Financial is 11.14 times less risky than Hennessy Small. It trades about 0.09 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,265 in Hennessy Small Cap on September 3, 2024 and sell it today you would earn a total of 532.00 from holding Hennessy Small Cap or generate 42.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Goldman Sachs Financial vs. Hennessy Small Cap
Performance |
| Timeline |
| Goldman Sachs Financial |
| Hennessy Small Cap |
Goldman Sachs and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Hennessy Small
The main advantage of trading using opposite Goldman Sachs and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Hennessy Small 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 Hennessy Small will offset losses from the drop in Hennessy Small's long position.| Goldman Sachs vs. Vanguard Total Stock | Goldman Sachs vs. Vanguard 500 Index | Goldman Sachs vs. Vanguard Total Stock | Goldman Sachs vs. Vanguard Total Stock |
| Hennessy Small vs. Us Vector Equity | Hennessy Small vs. The Fixed Income | Hennessy Small vs. Ultra Short Fixed Income | Hennessy Small vs. Gmo Global 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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