Correlation Between Goldman Sachs and Financial Services
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Financial Services 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 Financial Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Growth and Financial Services Portfolio, you can compare the effects of market volatilities on Goldman Sachs and Financial Services 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 Financial Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Financial Services.
Diversification Opportunities for Goldman Sachs and Financial Services
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GOLDMAN and Financial is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Growth and Financial Services Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services 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 Growth are associated (or correlated) with Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Financial Services go up and down completely randomly.
Pair Corralation between Goldman Sachs and Financial Services
Assuming the 90 days horizon Goldman Sachs Growth is expected to generate 0.79 times more return on investment than Financial Services. However, Goldman Sachs Growth is 1.26 times less risky than Financial Services. It trades about 0.51 of its potential returns per unit of risk. Financial Services Portfolio is currently generating about 0.32 per unit of risk. If you would invest 2,088 in Goldman Sachs Growth on September 4, 2024 and sell it today you would earn a total of 291.00 from holding Goldman Sachs Growth or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Goldman Sachs Growth vs. Financial Services Portfolio
Performance |
| Timeline |
| Goldman Sachs Growth |
| Financial Services |
Goldman Sachs and Financial Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Financial Services
The main advantage of trading using opposite Goldman Sachs and Financial Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Financial Services 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 Financial Services will offset losses from the drop in Financial Services' 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 |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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