Correlation Between Goldman Sachs and VHAI
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and VHAI 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 VHAI 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 VHAI, you can compare the effects of market volatilities on Goldman Sachs and VHAI 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 VHAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and VHAI.
Diversification Opportunities for Goldman Sachs and VHAI
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goldman and VHAI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI 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 VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and VHAI go up and down completely randomly.
Pair Corralation between Goldman Sachs and VHAI
Assuming the 90 days horizon Goldman Sachs Clean is expected to generate 0.09 times more return on investment than VHAI. However, Goldman Sachs Clean is 11.48 times less risky than VHAI. It trades about -0.05 of its potential returns per unit of risk. VHAI is currently generating about -0.11 per unit of risk. If you would invest 959.00 in Goldman Sachs Clean on September 3, 2024 and sell it today you would lose (69.00) from holding Goldman Sachs Clean or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Goldman Sachs Clean vs. VHAI
Performance |
| Timeline |
| Goldman Sachs Clean |
| VHAI |
Goldman Sachs and VHAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and VHAI
The main advantage of trading using opposite Goldman Sachs and VHAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, VHAI 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 VHAI will offset losses from the drop in VHAI's long position.| Goldman Sachs vs. Kinetics Internet Fund | Goldman Sachs vs. Kinetics Internet Fund | Goldman Sachs vs. Kinetics Internet Fund | Goldman Sachs vs. Goldman Sachs Clean |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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