Correlation Between Goldman Sachs and American Beacon
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and American Beacon 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 Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Real and American Beacon Ark, you can compare the effects of market volatilities on Goldman Sachs and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Beacon.
Diversification Opportunities for Goldman Sachs and American Beacon
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goldman and American is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and American Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Ark 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 Real are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Ark has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Beacon go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Beacon
Assuming the 90 days horizon Goldman Sachs is expected to generate 6.48 times less return on investment than American Beacon. But when comparing it to its historical volatility, Goldman Sachs Real is 2.7 times less risky than American Beacon. It trades about 0.08 of its potential returns per unit of risk. American Beacon Ark is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,455 in American Beacon Ark on September 13, 2024 and sell it today you would earn a total of 126.00 from holding American Beacon Ark or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Real vs. American Beacon Ark
Performance |
| Timeline |
| Goldman Sachs Real |
| American Beacon Ark |
Goldman Sachs and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Beacon
The main advantage of trading using opposite Goldman Sachs and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Goldman Sachs vs. Virtus Multi Sector Short | Goldman Sachs vs. Prudential Short Duration | Goldman Sachs vs. Boston Partners Longshort | Goldman Sachs vs. Siit Ultra Short |
| American Beacon vs. American Beacon Ark | American Beacon vs. Amer Beacon Ark | American Beacon vs. Amer Beacon Ark | American Beacon vs. Amer Beacon Ark |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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