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 High and American Funds 2010, 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
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOLDMAN and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs High and American Funds 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2010 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 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 2010 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 is expected to generate 4.38 times less return on investment than American Funds. But when comparing it to its historical volatility, Goldman Sachs High is 2.31 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds 2010 is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,220 in American Funds 2010 on September 5, 2024 and sell it today you would earn a total of 19.00 from holding American Funds 2010 or generate 1.56% 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. American Funds 2010
Performance |
| Timeline |
| Goldman Sachs High |
| American Funds 2010 |
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. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
| American Funds vs. Vanguard Star Fund | American Funds vs. Nuveen High Income | American Funds vs. Goldman Sachs High | American Funds vs. Ab Global Risk |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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