Correlation Between Goldman Sachs and American Funds
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and American Funds 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 American Funds 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 American Funds 2040, you can compare the effects of market volatilities on Goldman Sachs and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Funds.
Diversification Opportunities for Goldman Sachs and American Funds
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goldman and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Funds go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Funds
Assuming the 90 days horizon Goldman Sachs Short is expected to generate 0.12 times more return on investment than American Funds. However, Goldman Sachs Short is 8.5 times less risky than American Funds. It trades about 0.22 of its potential returns per unit of risk. American Funds 2040 is currently generating about -0.02 per unit of risk. If you would invest 1,029 in Goldman Sachs Short on October 25, 2024 and sell it today you would earn a total of 4.00 from holding Goldman Sachs Short or generate 0.39% 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. American Funds 2040
Performance |
| Timeline |
| Goldman Sachs Short |
| American Funds 2040 |
Goldman Sachs and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Funds
The main advantage of trading using opposite Goldman Sachs and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Goldman Sachs vs. Pace Municipal Fixed | Goldman Sachs vs. Blrc Sgy Mnp | Goldman Sachs vs. Ab Municipal Bond | Goldman Sachs vs. American High Income Municipal |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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