Correlation Between Goldman Sachs and Westwood Quality
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Westwood Quality 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 Westwood Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Emerging and Westwood Quality Smidcap, you can compare the effects of market volatilities on Goldman Sachs and Westwood Quality 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 Westwood Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Westwood Quality.
Diversification Opportunities for Goldman Sachs and Westwood Quality
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GOLDMAN and Westwood is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Emerging and Westwood Quality Smidcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Quality Smidcap 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 Emerging are associated (or correlated) with Westwood Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Quality Smidcap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Westwood Quality go up and down completely randomly.
Pair Corralation between Goldman Sachs and Westwood Quality
Assuming the 90 days horizon Goldman Sachs is expected to generate 26.87 times less return on investment than Westwood Quality. But when comparing it to its historical volatility, Goldman Sachs Emerging is 1.04 times less risky than Westwood Quality. It trades about 0.01 of its potential returns per unit of risk. Westwood Quality Smidcap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,570 in Westwood Quality Smidcap on September 2, 2024 and sell it today you would earn a total of 177.00 from holding Westwood Quality Smidcap or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Emerging vs. Westwood Quality Smidcap
Performance |
| Timeline |
| Goldman Sachs Emerging |
| Westwood Quality Smidcap |
Goldman Sachs and Westwood Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Westwood Quality
The main advantage of trading using opposite Goldman Sachs and Westwood Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Westwood Quality 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 Westwood Quality will offset losses from the drop in Westwood Quality's long position.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Centrated |
| Westwood Quality vs. Westwood Smidcap Fund | Westwood Quality vs. Westwood Income Opportunity | Westwood Quality vs. Westwood Largecap Value | Westwood Quality vs. Invesco DWA Healthcare |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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