Correlation Between Goldman Sachs and Total Return
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Total Return 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 Total Return 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 Total Return Bond, you can compare the effects of market volatilities on Goldman Sachs and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Total Return.
Diversification Opportunities for Goldman Sachs and Total Return
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goldman and Total is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Financial and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Total Return go up and down completely randomly.
Pair Corralation between Goldman Sachs and Total Return
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.61 times less return on investment than Total Return. But when comparing it to its historical volatility, Goldman Sachs Financial is 2.07 times less risky than Total Return. It trades about 0.09 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,054 in Total Return Bond on September 3, 2024 and sell it today you would earn a total of 88.00 from holding Total Return Bond or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.36% |
| Values | Daily Returns |
Goldman Sachs Financial vs. Total Return Bond
Performance |
| Timeline |
| Goldman Sachs Financial |
| Total Return Bond |
Goldman Sachs and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Total Return
The main advantage of trading using opposite Goldman Sachs and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return'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 |
| Total Return vs. Fundamental Large Cap | Total Return vs. Jhancock Disciplined Value | Total Return vs. Qs Large Cap | Total Return vs. Dodge Cox Stock |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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