Correlation Between Goldman Sachs and Materials Portfolio
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Materials Portfolio 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 Materials Portfolio 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 Materials Portfolio Fidelity, you can compare the effects of market volatilities on Goldman Sachs and Materials Portfolio 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 Materials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Materials Portfolio.
Diversification Opportunities for Goldman Sachs and Materials Portfolio
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Materials is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Growth and Materials Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Portfolio 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 Materials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Portfolio has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Materials Portfolio go up and down completely randomly.
Pair Corralation between Goldman Sachs and Materials Portfolio
Assuming the 90 days horizon Goldman Sachs Growth is expected to generate 0.48 times more return on investment than Materials Portfolio. However, Goldman Sachs Growth is 2.09 times less risky than Materials Portfolio. It trades about 0.1 of its potential returns per unit of risk. Materials Portfolio Fidelity is currently generating about 0.03 per unit of risk. If you would invest 1,298 in Goldman Sachs Growth on September 2, 2024 and sell it today you would earn a total of 360.00 from holding Goldman Sachs Growth or generate 27.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Growth vs. Materials Portfolio Fidelity
Performance |
| Timeline |
| Goldman Sachs Growth |
| Materials Portfolio |
Goldman Sachs and Materials Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Materials Portfolio
The main advantage of trading using opposite Goldman Sachs and Materials Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Materials Portfolio 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 Materials Portfolio will offset losses from the drop in Materials Portfolio's 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 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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