Correlation Between Goldman Sachs and Redwood Alphafactor
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Redwood Alphafactor 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 Redwood Alphafactor 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 Redwood Alphafactor Tactical, you can compare the effects of market volatilities on Goldman Sachs and Redwood Alphafactor 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 Redwood Alphafactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Redwood Alphafactor.
Diversification Opportunities for Goldman Sachs and Redwood Alphafactor
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Redwood is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Redwood Alphafactor Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Alphafactor 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 Redwood Alphafactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Alphafactor has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Redwood Alphafactor go up and down completely randomly.
Pair Corralation between Goldman Sachs and Redwood Alphafactor
Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 1.5 times more return on investment than Redwood Alphafactor. However, Goldman Sachs is 1.5 times more volatile than Redwood Alphafactor Tactical. It trades about 0.22 of its potential returns per unit of risk. Redwood Alphafactor Tactical is currently generating about 0.06 per unit of risk. If you would invest 3,202 in Goldman Sachs Technology on September 12, 2024 and sell it today you would earn a total of 501.00 from holding Goldman Sachs Technology or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Goldman Sachs Technology vs. Redwood Alphafactor Tactical
Performance |
| Timeline |
| Goldman Sachs Technology |
| Redwood Alphafactor |
Goldman Sachs and Redwood Alphafactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Redwood Alphafactor
The main advantage of trading using opposite Goldman Sachs and Redwood Alphafactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Redwood Alphafactor 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 Redwood Alphafactor will offset losses from the drop in Redwood Alphafactor's long position.| Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. Ambrus Core Bond | Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. Blrc Sgy Mnp |
| Redwood Alphafactor vs. Pgim Jennison Technology | Redwood Alphafactor vs. Vanguard Information Technology | Redwood Alphafactor vs. Goldman Sachs Technology | Redwood Alphafactor vs. Mfs Technology Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |