Correlation Between Goldman Sachs and Fidelity Government
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Fidelity Government 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 Fidelity Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Clean and Fidelity Government Income, you can compare the effects of market volatilities on Goldman Sachs and Fidelity Government 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 Fidelity Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Fidelity Government.
Diversification Opportunities for Goldman Sachs and Fidelity Government
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Fidelity Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Government 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 Clean are associated (or correlated) with Fidelity Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Government has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Fidelity Government go up and down completely randomly.
Pair Corralation between Goldman Sachs and Fidelity Government
Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Fidelity Government. In addition to that, Goldman Sachs is 4.48 times more volatile than Fidelity Government Income. It trades about -0.16 of its total potential returns per unit of risk. Fidelity Government Income is currently generating about 0.08 per unit of volatility. If you would invest 914.00 in Fidelity Government Income on September 4, 2024 and sell it today you would earn a total of 5.00 from holding Fidelity Government Income or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Clean vs. Fidelity Government Income
Performance |
| Timeline |
| Goldman Sachs Clean |
| Fidelity Government |
Goldman Sachs and Fidelity Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Fidelity Government
The main advantage of trading using opposite Goldman Sachs and Fidelity Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Fidelity Government 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 Fidelity Government will offset losses from the drop in Fidelity Government's long position.The idea behind Goldman Sachs Clean and Fidelity Government Income 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.
| Fidelity Government vs. Goldman Sachs Clean | Fidelity Government vs. Europac Gold Fund | Fidelity Government vs. Fidelity Advisor Gold | Fidelity Government vs. International Investors Gold |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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