Correlation Between Goldman Sachs and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Metropolitan West 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 Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs High and Metropolitan West High, you can compare the effects of market volatilities on Goldman Sachs and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Metropolitan West.
Diversification Opportunities for Goldman Sachs and Metropolitan West
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GOLDMAN and Metropolitan is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs High and Metropolitan West High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West High 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 High are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West High has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Metropolitan West go up and down completely randomly.
Pair Corralation between Goldman Sachs and Metropolitan West
Assuming the 90 days horizon Goldman Sachs High is expected to generate 0.8 times more return on investment than Metropolitan West. However, Goldman Sachs High is 1.26 times less risky than Metropolitan West. It trades about 0.29 of its potential returns per unit of risk. Metropolitan West High is currently generating about 0.18 per unit of risk. If you would invest 881.00 in Goldman Sachs High on August 29, 2024 and sell it today you would earn a total of 6.00 from holding Goldman Sachs High or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Goldman Sachs High vs. Metropolitan West High
Performance |
| Timeline |
| Goldman Sachs High |
| Metropolitan West High |
Goldman Sachs and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Metropolitan West
The main advantage of trading using opposite Goldman Sachs and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Goldman Sachs vs. Blrc Sgy Mnp | Goldman Sachs vs. Ms Global Fixed | Goldman Sachs vs. Rationalpier 88 Convertible | Goldman Sachs vs. Ambrus Core Bond |
| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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