Correlation Between Goldman Sachs and California Bond
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Goldman Sachs and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and California Bond.
Diversification Opportunities for Goldman Sachs and California Bond
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goldman and California is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and California Bond go up and down completely randomly.
Pair Corralation between Goldman Sachs and California Bond
Assuming the 90 days horizon Goldman Sachs Technology is expected to generate 4.19 times more return on investment than California Bond. However, Goldman Sachs is 4.19 times more volatile than California Bond Fund. It trades about -0.04 of its potential returns per unit of risk. California Bond Fund is currently generating about -0.2 per unit of risk. If you would invest 3,598 in Goldman Sachs Technology on October 13, 2024 and sell it today you would lose (47.00) from holding Goldman Sachs Technology or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Technology vs. California Bond Fund
Performance |
| Timeline |
| Goldman Sachs Technology |
| California Bond |
Goldman Sachs and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and California Bond
The main advantage of trading using opposite Goldman Sachs and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond's long position.| Goldman Sachs vs. Alliancebernstein Bond | Goldman Sachs vs. Franklin High Yield | Goldman Sachs vs. Bbh Intermediate Municipal | Goldman Sachs vs. Pace Strategic Fixed |
| California Bond vs. Dreyfus Technology Growth | California Bond vs. Columbia Global Technology | California Bond vs. Goldman Sachs Technology | California Bond vs. Towpath 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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