Correlation Between Goldman Sachs and Red Oak
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Red Oak 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 Red Oak 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 Red Oak Technology, you can compare the effects of market volatilities on Goldman Sachs and Red Oak 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 Red Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Red Oak.
Diversification Opportunities for Goldman Sachs and Red Oak
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goldman and Red is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs High and Red Oak Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Oak Technology 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 Red Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Oak Technology has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Red Oak go up and down completely randomly.
Pair Corralation between Goldman Sachs and Red Oak
Assuming the 90 days horizon Goldman Sachs is expected to generate 4.86 times less return on investment than Red Oak. But when comparing it to its historical volatility, Goldman Sachs High is 3.89 times less risky than Red Oak. It trades about 0.08 of its potential returns per unit of risk. Red Oak Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,768 in Red Oak Technology on August 30, 2024 and sell it today you would earn a total of 2,081 from holding Red Oak Technology or generate 75.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs High vs. Red Oak Technology
Performance |
| Timeline |
| Goldman Sachs High |
| Red Oak Technology |
Goldman Sachs and Red Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Red Oak
The main advantage of trading using opposite Goldman Sachs and Red Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Red Oak 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 Red Oak will offset losses from the drop in Red Oak'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 |
| Red Oak vs. Live Oak Health | Red Oak vs. HUMANA INC | Red Oak vs. Aquagold International | Red Oak vs. Barloworld Ltd ADR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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