Correlation Between Goldman Sachs and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Wells Fargo 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 Wells Fargo 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 Wells Fargo Ultra, you can compare the effects of market volatilities on Goldman Sachs and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Wells Fargo.
Diversification Opportunities for Goldman Sachs and Wells Fargo
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Wells is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Wells Fargo Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Ultra 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Ultra has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Wells Fargo go up and down completely randomly.
Pair Corralation between Goldman Sachs and Wells Fargo
Assuming the 90 days horizon Goldman Sachs Short is expected to generate 1.66 times more return on investment than Wells Fargo. However, Goldman Sachs is 1.66 times more volatile than Wells Fargo Ultra. It trades about 0.44 of its potential returns per unit of risk. Wells Fargo Ultra is currently generating about 0.18 per unit of risk. If you would invest 963.00 in Goldman Sachs Short on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Goldman Sachs Short or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Short vs. Wells Fargo Ultra
Performance |
| Timeline |
| Goldman Sachs Short |
| Wells Fargo Ultra |
Goldman Sachs and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Wells Fargo
The main advantage of trading using opposite Goldman Sachs and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo'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 |
| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Ultra |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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