Correlation Between Goldman Sachs and Northern Global
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Northern Global 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 Northern Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Short and Northern Global Tactical, you can compare the effects of market volatilities on Goldman Sachs and Northern Global 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 Northern Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Northern Global.
Diversification Opportunities for Goldman Sachs and Northern Global
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Goldman and Northern is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Northern Global Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Global Tactical 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 Short are associated (or correlated) with Northern Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Global Tactical has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Northern Global go up and down completely randomly.
Pair Corralation between Goldman Sachs and Northern Global
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.14 times less return on investment than Northern Global. But when comparing it to its historical volatility, Goldman Sachs Short is 3.55 times less risky than Northern Global. It trades about 0.44 of its potential returns per unit of risk. Northern Global Tactical is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,326 in Northern Global Tactical on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Northern Global Tactical or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Short vs. Northern Global Tactical
Performance |
| Timeline |
| Goldman Sachs Short |
| Northern Global Tactical |
Goldman Sachs and Northern Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Northern Global
The main advantage of trading using opposite Goldman Sachs and Northern Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Northern Global 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 Northern Global will offset losses from the drop in Northern Global's long position.| Goldman Sachs vs. Qs Large Cap | Goldman Sachs vs. Avantis Large Cap | Goldman Sachs vs. Qs Large Cap | Goldman Sachs vs. Dunham Large Cap |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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