Correlation Between Goldman Sachs and Rising Rates
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Rising Rates 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 Rising Rates 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 Rising Rates Opportunity, you can compare the effects of market volatilities on Goldman Sachs and Rising Rates 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 Rising Rates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Rising Rates.
Diversification Opportunities for Goldman Sachs and Rising Rates
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Rising is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Rising Rates Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Rates Opportunity 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 Rising Rates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Rates Opportunity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Rising Rates go up and down completely randomly.
Pair Corralation between Goldman Sachs and Rising Rates
Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 2.39 times more return on investment than Rising Rates. However, Goldman Sachs is 2.39 times more volatile than Rising Rates Opportunity. It trades about 0.1 of its potential returns per unit of risk. Rising Rates Opportunity is currently generating about 0.05 per unit of risk. If you would invest 2,456 in Goldman Sachs Technology on September 12, 2024 and sell it today you would earn a total of 1,247 from holding Goldman Sachs Technology or generate 50.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Goldman Sachs Technology vs. Rising Rates Opportunity
Performance |
| Timeline |
| Goldman Sachs Technology |
| Rising Rates Opportunity |
Goldman Sachs and Rising Rates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Rising Rates
The main advantage of trading using opposite Goldman Sachs and Rising Rates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Rising Rates 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 Rising Rates will offset losses from the drop in Rising Rates' long position.| Goldman Sachs vs. Vanguard Information Technology | Goldman Sachs vs. Technology Portfolio Technology | Goldman Sachs vs. Fidelity Select Semiconductors | Goldman Sachs vs. Software And It |
| Rising Rates vs. Firsthand Technology Opportunities | Rising Rates vs. Global Technology Portfolio | Rising Rates vs. Vanguard Information Technology | Rising Rates vs. Goldman Sachs Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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