Correlation Between Goldman Sachs and Small Capitalization
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Small Capitalization 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 Small Capitalization 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 Small Capitalization Portfolio, you can compare the effects of market volatilities on Goldman Sachs and Small Capitalization 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 Small Capitalization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Small Capitalization.
Diversification Opportunities for Goldman Sachs and Small Capitalization
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goldman and Small is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and Small Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Capitalization 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 Small Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Capitalization has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Small Capitalization go up and down completely randomly.
Pair Corralation between Goldman Sachs and Small Capitalization
Assuming the 90 days horizon Goldman Sachs Clean is expected to generate 0.33 times more return on investment than Small Capitalization. However, Goldman Sachs Clean is 3.04 times less risky than Small Capitalization. It trades about -0.02 of its potential returns per unit of risk. Small Capitalization Portfolio is currently generating about -0.03 per unit of risk. If you would invest 952.00 in Goldman Sachs Clean on September 12, 2024 and sell it today you would lose (85.00) from holding Goldman Sachs Clean or give up 8.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Clean vs. Small Capitalization Portfolio
Performance |
| Timeline |
| Goldman Sachs Clean |
| Small Capitalization |
Goldman Sachs and Small Capitalization Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Small Capitalization
The main advantage of trading using opposite Goldman Sachs and Small Capitalization positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Small Capitalization 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 Small Capitalization will offset losses from the drop in Small Capitalization'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 |
| Small Capitalization vs. Gabelli Gold Fund | Small Capitalization vs. Goldman Sachs Clean | Small Capitalization vs. Gold And Precious | Small Capitalization vs. Gamco Global 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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