Correlation Between Goldman Sachs and Mondrian Global
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Mondrian Global 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 Mondrian Global 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 Mondrian Global Equity, you can compare the effects of market volatilities on Goldman Sachs and Mondrian Global 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 Mondrian Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Mondrian Global.
Diversification Opportunities for Goldman Sachs and Mondrian Global
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Mondrian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Mondrian Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondrian Global Equity 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 Mondrian Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondrian Global Equity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Mondrian Global go up and down completely randomly.
Pair Corralation between Goldman Sachs and Mondrian Global
Assuming the 90 days horizon Goldman Sachs Clean is not expected to generate positive returns. Moreover, Goldman Sachs is 1.84 times more volatile than Mondrian Global Equity. It trades away all of its potential returns to assume current level of volatility. Mondrian Global Equity is currently generating about 0.1 per unit of risk. If you would invest 1,263 in Mondrian Global Equity on September 14, 2024 and sell it today you would earn a total of 225.00 from holding Mondrian Global Equity or generate 17.81% 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. Mondrian Global Equity
Performance |
| Timeline |
| Goldman Sachs Clean |
| Mondrian Global Equity |
Goldman Sachs and Mondrian Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Mondrian Global
The main advantage of trading using opposite Goldman Sachs and Mondrian Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Mondrian Global 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 Mondrian Global will offset losses from the drop in Mondrian Global's long position.| Goldman Sachs vs. Mid Cap 15x Strategy | Goldman Sachs vs. Investec Emerging Markets | Goldman Sachs vs. Nasdaq 100 2x Strategy | Goldman Sachs vs. Vy Jpmorgan Emerging |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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