Correlation Between Goldman Sachs and Aquagold International
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Aquagold International 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 Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs International and Aquagold International, you can compare the effects of market volatilities on Goldman Sachs and Aquagold International 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 Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Aquagold International.
Diversification Opportunities for Goldman Sachs and Aquagold International
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Goldman and Aquagold is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs International and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 International are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Aquagold International go up and down completely randomly.
Pair Corralation between Goldman Sachs and Aquagold International
Assuming the 90 days horizon Goldman Sachs is expected to generate 62.02 times less return on investment than Aquagold International. But when comparing it to its historical volatility, Goldman Sachs International is 60.28 times less risky than Aquagold International. It trades about 0.05 of its potential returns per unit of risk. Aquagold International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.10 in Aquagold International on November 27, 2024 and sell it today you would lose (0.08) from holding Aquagold International or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.37% |
| Values | Daily Returns |
Goldman Sachs International vs. Aquagold International
Performance |
| Timeline |
| Goldman Sachs Intern |
| Aquagold International |
Goldman Sachs and Aquagold International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Aquagold International
The main advantage of trading using opposite Goldman Sachs and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.| Goldman Sachs vs. Wisdomtree Siegel Global | Goldman Sachs vs. Aqr Global Macro | Goldman Sachs vs. Rbc Global Equity | Goldman Sachs vs. Legg Mason Bw |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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