Correlation Between Goldman Sachs and California High-yield
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and California High-yield 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 California High-yield 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 California High Yield Municipal, you can compare the effects of market volatilities on Goldman Sachs and California High-yield 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 California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and California High-yield.
Diversification Opportunities for Goldman Sachs and California High-yield
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between GOLDMAN and California is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs High and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and California High-yield go up and down completely randomly.
Pair Corralation between Goldman Sachs and California High-yield
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.18 times less return on investment than California High-yield. In addition to that, Goldman Sachs is 1.11 times more volatile than California High Yield Municipal. It trades about 0.11 of its total potential returns per unit of risk. California High Yield Municipal is currently generating about 0.15 per unit of volatility. If you would invest 980.00 in California High Yield Municipal on August 28, 2024 and sell it today you would earn a total of 10.00 from holding California High Yield Municipal or generate 1.02% 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 High vs. California High Yield Municipa
Performance |
| Timeline |
| Goldman Sachs High |
| California High Yield |
Goldman Sachs and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and California High-yield
The main advantage of trading using opposite Goldman Sachs and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, California High-yield 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 California High-yield will offset losses from the drop in California High-yield'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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