Correlation Between Goldman Sachs and Nationwide
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Nationwide 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 Nationwide 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 Nationwide E Plus, you can compare the effects of market volatilities on Goldman Sachs and Nationwide 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 Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Nationwide.
Diversification Opportunities for Goldman Sachs and Nationwide
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Nationwide is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Nationwide E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide E Plus 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 Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide E Plus has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Nationwide go up and down completely randomly.
Pair Corralation between Goldman Sachs and Nationwide
Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the Nationwide. In addition to that, Goldman Sachs is 1.8 times more volatile than Nationwide E Plus. It trades about -0.15 of its total potential returns per unit of risk. Nationwide E Plus is currently generating about -0.18 per unit of volatility. If you would invest 896.00 in Nationwide E Plus on September 12, 2024 and sell it today you would lose (16.00) from holding Nationwide E Plus or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Goldman Sachs Clean vs. Nationwide E Plus
Performance |
| Timeline |
| Goldman Sachs Clean |
| Nationwide E Plus |
Goldman Sachs and Nationwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Nationwide
The main advantage of trading using opposite Goldman Sachs and Nationwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Nationwide 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 Nationwide will offset losses from the drop in Nationwide's long position.| Goldman Sachs vs. Leggmason Partners Institutional | Goldman Sachs vs. Falcon Focus Scv | Goldman Sachs vs. Abr 7525 Volatility | Goldman Sachs vs. Scharf Global Opportunity |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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