Correlation Between Goldman Sachs and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Emerging Markets 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 Emerging Markets 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 The Emerging Markets, you can compare the effects of market volatilities on Goldman Sachs and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Emerging Markets.
Diversification Opportunities for Goldman Sachs and Emerging Markets
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GOLDMAN and Emerging is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Emerging Markets go up and down completely randomly.
Pair Corralation between Goldman Sachs and Emerging Markets
Assuming the 90 days horizon Goldman Sachs Short is expected to generate 0.11 times more return on investment than Emerging Markets. However, Goldman Sachs Short is 9.46 times less risky than Emerging Markets. It trades about -0.27 of its potential returns per unit of risk. The Emerging Markets is currently generating about -0.42 per unit of risk. If you would invest 1,038 in Goldman Sachs Short on October 9, 2024 and sell it today you would lose (5.00) from holding Goldman Sachs Short or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Short vs. The Emerging Markets
Performance |
| Timeline |
| Goldman Sachs Short |
| Emerging Markets |
Goldman Sachs and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Emerging Markets
The main advantage of trading using opposite Goldman Sachs and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
| Emerging Markets vs. Delaware Healthcare Fund | Emerging Markets vs. Fidelity Advisor Health | Emerging Markets vs. Baron Health Care | Emerging Markets vs. Alphacentric Lifesci Healthcare |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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