Correlation Between Goldman Sachs and New York
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and New York 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 New York 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 New York Tax Free, you can compare the effects of market volatilities on Goldman Sachs and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and New York.
Diversification Opportunities for Goldman Sachs and New York
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goldman and New is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and New York Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Tax 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Tax has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and New York go up and down completely randomly.
Pair Corralation between Goldman Sachs and New York
Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the New York. In addition to that, Goldman Sachs is 4.49 times more volatile than New York Tax Free. It trades about -0.04 of its total potential returns per unit of risk. New York Tax Free is currently generating about 0.08 per unit of volatility. If you would invest 995.00 in New York Tax Free on September 4, 2024 and sell it today you would earn a total of 104.00 from holding New York Tax Free or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Clean vs. New York Tax Free
Performance |
| Timeline |
| Goldman Sachs Clean |
| New York Tax |
Goldman Sachs and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and New York
The main advantage of trading using opposite Goldman Sachs and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.The idea behind Goldman Sachs Clean and New York Tax Free 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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