Correlation Between Goldman Sachs and American Funds
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and American Funds 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 Funds 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 Funds 2020, you can compare the effects of market volatilities on Goldman Sachs and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Funds.
Diversification Opportunities for Goldman Sachs and American Funds
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Goldman and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and American Funds 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2020 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2020 has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Funds go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Funds
Assuming the 90 days horizon Goldman Sachs Real is expected to under-perform the American Funds. In addition to that, Goldman Sachs is 3.2 times more volatile than American Funds 2020. It trades about -0.01 of its total potential returns per unit of risk. American Funds 2020 is currently generating about 0.18 per unit of volatility. If you would invest 1,432 in American Funds 2020 on September 13, 2024 and sell it today you would earn a total of 14.00 from holding American Funds 2020 or generate 0.98% 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 Funds 2020
Performance |
| Timeline |
| Goldman Sachs Real |
| American Funds 2020 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Goldman Sachs and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Funds
The main advantage of trading using opposite Goldman Sachs and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Goldman Sachs vs. Fidelity Real Estate | Goldman Sachs vs. Forum Real Estate | Goldman Sachs vs. Redwood Real Estate | Goldman Sachs vs. Jhancock Real Estate |
| American Funds vs. T Rowe Price | American Funds vs. Volumetric Fund Volumetric | American Funds vs. Small Cap Stock | American Funds vs. Eic Value 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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