Correlation Between Goldman Sachs and Small Cap
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Small Cap 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 Cap 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 Small Cap Value, you can compare the effects of market volatilities on Goldman Sachs and Small Cap 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 Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Small Cap.
Diversification Opportunities for Goldman Sachs and Small Cap
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Small is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Small Cap go up and down completely randomly.
Pair Corralation between Goldman Sachs and Small Cap
Assuming the 90 days horizon Goldman Sachs is expected to generate 2.98 times less return on investment than Small Cap. But when comparing it to its historical volatility, Goldman Sachs Short is 7.42 times less risky than Small Cap. It trades about 0.12 of its potential returns per unit of risk. Small Cap Value is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,498 in Small Cap Value on September 12, 2024 and sell it today you would earn a total of 427.00 from holding Small Cap Value or generate 28.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Goldman Sachs Short vs. Small Cap Value
Performance |
| Timeline |
| Goldman Sachs Short |
| Small Cap Value |
Goldman Sachs and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Small Cap
The main advantage of trading using opposite Goldman Sachs and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Small Cap 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 Cap will offset losses from the drop in Small Cap's long position.| Goldman Sachs vs. Blackrock Health Sciences | Goldman Sachs vs. Hartford Healthcare Hls | Goldman Sachs vs. Deutsche Health And | Goldman Sachs vs. Allianzgi Health Sciences |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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