Correlation Between Goldman Sachs and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Applied Finance 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 Applied Finance 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 Applied Finance Core, you can compare the effects of market volatilities on Goldman Sachs and Applied Finance 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 Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Applied Finance.
Diversification Opportunities for Goldman Sachs and Applied Finance
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Goldman and Applied is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Applied Finance Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Core 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 Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Core has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Applied Finance go up and down completely randomly.
Pair Corralation between Goldman Sachs and Applied Finance
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.08 times less return on investment than Applied Finance. In addition to that, Goldman Sachs is 1.54 times more volatile than Applied Finance Core. It trades about 0.06 of its total potential returns per unit of risk. Applied Finance Core is currently generating about 0.1 per unit of volatility. If you would invest 954.00 in Applied Finance Core on September 4, 2024 and sell it today you would earn a total of 280.00 from holding Applied Finance Core or generate 29.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Goldman Sachs Real vs. Applied Finance Core
Performance |
| Timeline |
| Goldman Sachs Real |
| Applied Finance Core |
Goldman Sachs and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Applied Finance
The main advantage of trading using opposite Goldman Sachs and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Goldman Sachs vs. Realty Income | Goldman Sachs vs. Dynex Capital | Goldman Sachs vs. First Industrial Realty | Goldman Sachs vs. Healthcare Realty Trust |
| Applied Finance vs. Cs 607 Tax | Applied Finance vs. Lind Capital Partners | Applied Finance vs. Morningstar Municipal Bond | Applied Finance vs. Nuveen Minnesota Municipal |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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