Correlation Between Goldman Sachs and Global X
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Innovate and Global X Thematic, you can compare the effects of market volatilities on Goldman Sachs and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Global X.
Diversification Opportunities for Goldman Sachs and Global X
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Global is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Innovate and Global X Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Thematic 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 Innovate are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Thematic has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Global X go up and down completely randomly.
Pair Corralation between Goldman Sachs and Global X
Given the investment horizon of 90 days Goldman Sachs Innovate is expected to generate 0.81 times more return on investment than Global X. However, Goldman Sachs Innovate is 1.23 times less risky than Global X. It trades about 0.17 of its potential returns per unit of risk. Global X Thematic is currently generating about -0.02 per unit of risk. If you would invest 6,171 in Goldman Sachs Innovate on August 29, 2024 and sell it today you would earn a total of 213.00 from holding Goldman Sachs Innovate or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Innovate vs. Global X Thematic
Performance |
| Timeline |
| Goldman Sachs Innovate |
| Global X Thematic |
Goldman Sachs and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Global X
The main advantage of trading using opposite Goldman Sachs and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Goldman Sachs vs. Invesco DWA Utilities | Goldman Sachs vs. Invesco Dynamic Large | Goldman Sachs vs. Invesco Dynamic Large | Goldman Sachs vs. HUMANA INC |
| Global X vs. Main Sector Rotation | Global X vs. Franklin Exponential Data | Global X vs. Goldman Sachs Innovate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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