Correlation Between Goldman Sachs and American Funds
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and American Funds 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 American Funds 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 American Funds Income, you can compare the effects of market volatilities on Goldman Sachs and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Funds.
Diversification Opportunities for Goldman Sachs and American Funds
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goldman and American is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Funds go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Funds
Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the American Funds. In addition to that, Goldman Sachs is 3.13 times more volatile than American Funds Income. It trades about -0.04 of its total potential returns per unit of risk. American Funds Income is currently generating about 0.11 per unit of volatility. If you would invest 1,128 in American Funds Income on September 12, 2024 and sell it today you would earn a total of 242.00 from holding American Funds Income or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Clean vs. American Funds Income
Performance |
| Timeline |
| Goldman Sachs Clean |
| American Funds Income |
Goldman Sachs and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Funds
The main advantage of trading using opposite Goldman Sachs and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Guidemark Smallmid Cap | American Funds vs. Pace Smallmedium Value | American Funds vs. Kinetics Small Cap | American Funds vs. Mutual Of America |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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