Correlation Between Goldman Sachs and Small Cap
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Technology and Small Cap Growth, you can compare the effects of market volatilities on Goldman Sachs and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Small Cap.
Diversification Opportunities for Goldman Sachs and Small Cap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Small is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Technology are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Small Cap go up and down completely randomly.
Pair Corralation between Goldman Sachs and Small Cap
Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 1.1 times more return on investment than Small Cap. However, Goldman Sachs is 1.1 times more volatile than Small Cap Growth. It trades about 0.09 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.07 per unit of risk. If you would invest 2,365 in Goldman Sachs Technology on September 2, 2024 and sell it today you would earn a total of 1,186 from holding Goldman Sachs Technology or generate 50.15% 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 Technology vs. Small Cap Growth
Performance |
| Timeline |
| Goldman Sachs Technology |
| Small Cap Growth |
Goldman Sachs and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Small Cap
The main advantage of trading using opposite Goldman Sachs and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Goldman Sachs vs. Dws Government Money | Goldman Sachs vs. Aig Government Money | Goldman Sachs vs. Lord Abbett Government | Goldman Sachs vs. Blackrock Government Bond |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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