Correlation Between Goldman Sachs and Western Asset
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Western Asset 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 Western Asset 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 Western Asset Managed, you can compare the effects of market volatilities on Goldman Sachs and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Western Asset.
Diversification Opportunities for Goldman Sachs and Western Asset
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Western is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Managed has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Western Asset go up and down completely randomly.
Pair Corralation between Goldman Sachs and Western Asset
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.05 times less return on investment than Western Asset. But when comparing it to its historical volatility, Goldman Sachs Short is 1.35 times less risky than Western Asset. It trades about 0.3 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,508 in Western Asset Managed on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Western Asset Managed or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Goldman Sachs Short vs. Western Asset Managed
Performance |
| Timeline |
| Goldman Sachs Short |
| Western Asset Managed |
Goldman Sachs and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Western Asset
The main advantage of trading using opposite Goldman Sachs and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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