Correlation Between Goldman Sachs and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Horizon Active 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 Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Equity and Horizon Active Dividend, you can compare the effects of market volatilities on Goldman Sachs and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Horizon Active.
Diversification Opportunities for Goldman Sachs and Horizon Active
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Goldman and Horizon is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Equity and Horizon Active Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Dividend 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 Equity are associated (or correlated) with Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Dividend has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Horizon Active go up and down completely randomly.
Pair Corralation between Goldman Sachs and Horizon Active
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.06 times less return on investment than Horizon Active. But when comparing it to its historical volatility, Goldman Sachs Equity is 1.16 times less risky than Horizon Active. It trades about 0.17 of its potential returns per unit of risk. Horizon Active Dividend is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 7,362 in Horizon Active Dividend on August 27, 2024 and sell it today you would earn a total of 167.00 from holding Horizon Active Dividend or generate 2.27% 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 Equity vs. Horizon Active Dividend
Performance |
| Timeline |
| Goldman Sachs Equity |
| Horizon Active Dividend |
Goldman Sachs and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Horizon Active
The main advantage of trading using opposite Goldman Sachs and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active'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 |
| Horizon Active vs. Horizon Defined Risk | Horizon Active vs. Horizon Active Risk | Horizon Active vs. Horizon Active Risk | Horizon Active vs. Horizon Defined Risk |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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