Correlation Between Goldman Sachs and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Needham Aggressive 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 Needham Aggressive 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 Needham Aggressive Growth, you can compare the effects of market volatilities on Goldman Sachs and Needham Aggressive 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 Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Needham Aggressive.
Diversification Opportunities for Goldman Sachs and Needham Aggressive
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Needham is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs High and Needham Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Aggressive Growth 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 Needham Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Aggressive Growth has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Needham Aggressive go up and down completely randomly.
Pair Corralation between Goldman Sachs and Needham Aggressive
Assuming the 90 days horizon Goldman Sachs is expected to generate 21.32 times less return on investment than Needham Aggressive. But when comparing it to its historical volatility, Goldman Sachs High is 12.78 times less risky than Needham Aggressive. It trades about 0.08 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,934 in Needham Aggressive Growth on September 13, 2024 and sell it today you would earn a total of 180.00 from holding Needham Aggressive Growth or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs High vs. Needham Aggressive Growth
Performance |
| Timeline |
| Goldman Sachs High |
| Needham Aggressive Growth |
Goldman Sachs and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Needham Aggressive
The main advantage of trading using opposite Goldman Sachs and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Needham Aggressive 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 Needham Aggressive will offset losses from the drop in Needham Aggressive's long position.| Goldman Sachs vs. Ab Select Equity | Goldman Sachs vs. Calamos Global Equity | Goldman Sachs vs. Artisan Select Equity | Goldman Sachs vs. Sarofim Equity |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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