Correlation Between Goldman Sachs and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Balanced Fund 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 Balanced Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Mid and Balanced Fund Retail, you can compare the effects of market volatilities on Goldman Sachs and Balanced Fund 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 Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Balanced Fund.
Diversification Opportunities for Goldman Sachs and Balanced Fund
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Balanced is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Mid and Balanced Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Retail 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 Mid are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Retail has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Balanced Fund go up and down completely randomly.
Pair Corralation between Goldman Sachs and Balanced Fund
Assuming the 90 days horizon Goldman Sachs Mid is expected to generate 1.55 times more return on investment than Balanced Fund. However, Goldman Sachs is 1.55 times more volatile than Balanced Fund Retail. It trades about 0.27 of its potential returns per unit of risk. Balanced Fund Retail is currently generating about 0.12 per unit of risk. If you would invest 3,707 in Goldman Sachs Mid on August 31, 2024 and sell it today you would earn a total of 210.00 from holding Goldman Sachs Mid or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Mid vs. Balanced Fund Retail
Performance |
| Timeline |
| Goldman Sachs Mid |
| Balanced Fund Retail |
Goldman Sachs and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Balanced Fund
The main advantage of trading using opposite Goldman Sachs and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Balanced Fund 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 Balanced Fund will offset losses from the drop in Balanced Fund's long position.| Goldman Sachs vs. Balanced Fund Retail | Goldman Sachs vs. Cutler Equity | Goldman Sachs vs. Us Vector Equity | Goldman Sachs vs. Small Cap Equity |
| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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