Correlation Between Goldman Sachs and First Asset
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and First Asset 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 First Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs ActiveBeta and First Asset Morningstar, you can compare the effects of market volatilities on Goldman Sachs and First Asset 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 First Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and First Asset.
Diversification Opportunities for Goldman Sachs and First Asset
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and First Asset Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Asset Morningstar 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 ActiveBeta are associated (or correlated) with First Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Asset Morningstar has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and First Asset go up and down completely randomly.
Pair Corralation between Goldman Sachs and First Asset
Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.31 times less return on investment than First Asset. But when comparing it to its historical volatility, Goldman Sachs ActiveBeta is 1.14 times less risky than First Asset. It trades about 0.32 of its potential returns per unit of risk. First Asset Morningstar is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,090 in First Asset Morningstar on September 3, 2024 and sell it today you would earn a total of 186.00 from holding First Asset Morningstar or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Goldman Sachs ActiveBeta vs. First Asset Morningstar
Performance |
| Timeline |
| Goldman Sachs ActiveBeta |
| First Asset Morningstar |
Goldman Sachs and First Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and First Asset
The main advantage of trading using opposite Goldman Sachs and First Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, First Asset 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 First Asset will offset losses from the drop in First Asset's long position.| Goldman Sachs vs. Mackenzie Canadian Equity | Goldman Sachs vs. Mackenzie Large Cap | Goldman Sachs vs. BMO MSCI EAFE | Goldman Sachs vs. BMO Long Federal |
| First Asset vs. Mackenzie Large Cap | First Asset vs. Goldman Sachs ActiveBeta | First Asset vs. BMO MSCI EAFE | First Asset vs. BMO Long Federal |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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