Correlation Between Goldman Sachs and American Balanced
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and American Balanced 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 American Balanced 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 American Balanced Fund, you can compare the effects of market volatilities on Goldman Sachs and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Balanced.
Diversification Opportunities for Goldman Sachs and American Balanced
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Balanced go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Balanced
Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 2.35 times more return on investment than American Balanced. However, Goldman Sachs is 2.35 times more volatile than American Balanced Fund. It trades about 0.19 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.07 per unit of risk. If you would invest 3,297 in Goldman Sachs Technology on August 29, 2024 and sell it today you would earn a total of 297.00 from holding Goldman Sachs Technology or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Technology vs. American Balanced Fund
Performance |
| Timeline |
| Goldman Sachs Technology |
| American Balanced |
Goldman Sachs and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Balanced
The main advantage of trading using opposite Goldman Sachs and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.| Goldman Sachs vs. Red Oak Technology | Goldman Sachs vs. Live Oak Health | Goldman Sachs vs. HUMANA INC | Goldman Sachs vs. Aquagold International |
| American Balanced vs. Mfs Technology Fund | American Balanced vs. Technology Ultrasector Profund | American Balanced vs. Goldman Sachs Technology | American Balanced vs. Dreyfus Technology Growth |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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