Correlation Between Goldman Sachs and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Northern Lights 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 Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Access and Northern Lights, you can compare the effects of market volatilities on Goldman Sachs and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Northern Lights.
Diversification Opportunities for Goldman Sachs and Northern Lights
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Northern is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Access and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Access are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Northern Lights go up and down completely randomly.
Pair Corralation between Goldman Sachs and Northern Lights
Given the investment horizon of 90 days Goldman Sachs Access is expected to under-perform the Northern Lights. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Access is 2.79 times less risky than Northern Lights. The etf trades about -0.05 of its potential returns per unit of risk. The Northern Lights is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,020 in Northern Lights on August 26, 2024 and sell it today you would earn a total of 183.00 from holding Northern Lights or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Access vs. Northern Lights
Performance |
| Timeline |
| Goldman Sachs Access |
| Northern Lights |
Goldman Sachs and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Northern Lights
The main advantage of trading using opposite Goldman Sachs and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Goldman Sachs vs. Senstar Technologies | Goldman Sachs vs. ImmuCell | Goldman Sachs vs. Anika Therapeutics | Goldman Sachs vs. Aquagold International |
| Northern Lights vs. Inspire Global Hope | Northern Lights vs. Inspire SmallMid Cap | Northern Lights vs. Inspire International ESG | Northern Lights vs. Northern Lights |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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