Correlation Between Goldman Sachs and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Federated Mdt 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 Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Balanced and Federated Mdt Large, you can compare the effects of market volatilities on Goldman Sachs and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Federated Mdt.
Diversification Opportunities for Goldman Sachs and Federated Mdt
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goldman and Federated is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Balanced and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Balanced are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Federated Mdt go up and down completely randomly.
Pair Corralation between Goldman Sachs and Federated Mdt
Assuming the 90 days horizon Goldman Sachs is expected to generate 7.03 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Goldman Sachs Balanced is 2.11 times less risky than Federated Mdt. It trades about 0.1 of its potential returns per unit of risk. Federated Mdt Large is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,530 in Federated Mdt Large on August 29, 2024 and sell it today you would earn a total of 228.00 from holding Federated Mdt Large or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Balanced vs. Federated Mdt Large
Performance |
| Timeline |
| Goldman Sachs Balanced |
| Federated Mdt Large |
Goldman Sachs and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Federated Mdt
The main advantage of trading using opposite Goldman Sachs and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt's long position.| Goldman Sachs vs. Lifestyle Ii Moderate | Goldman Sachs vs. Franklin Lifesmart Retirement | Goldman Sachs vs. Target Retirement 2040 | Goldman Sachs vs. Calvert Moderate Allocation |
| Federated Mdt vs. Federated Mdt Large | Federated Mdt vs. Federated Kaufmann Large | Federated Mdt vs. Federated Total Return | Federated Mdt vs. Nationwide Ziegler Nyse |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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