Correlation Between Goldman Sachs and Gotham Defensive
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Gotham Defensive 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 Gotham Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Managed and Gotham Defensive Long, you can compare the effects of market volatilities on Goldman Sachs and Gotham Defensive 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 Gotham Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Gotham Defensive.
Diversification Opportunities for Goldman Sachs and Gotham Defensive
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Gotham is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Managed and Gotham Defensive Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Defensive Long 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 Managed are associated (or correlated) with Gotham Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Defensive Long has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Gotham Defensive go up and down completely randomly.
Pair Corralation between Goldman Sachs and Gotham Defensive
Assuming the 90 days horizon Goldman Sachs Managed is expected to under-perform the Gotham Defensive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Managed is 1.06 times less risky than Gotham Defensive. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Gotham Defensive Long is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,436 in Gotham Defensive Long on September 12, 2024 and sell it today you would earn a total of 424.00 from holding Gotham Defensive Long or generate 29.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Managed vs. Gotham Defensive Long
Performance |
| Timeline |
| Goldman Sachs Managed |
| Gotham Defensive Long |
Goldman Sachs and Gotham Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Gotham Defensive
The main advantage of trading using opposite Goldman Sachs and Gotham Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Gotham Defensive 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 Gotham Defensive will offset losses from the drop in Gotham Defensive's long position.| Goldman Sachs vs. Tfa Alphagen Growth | Goldman Sachs vs. Smallcap Growth Fund | Goldman Sachs vs. Small Pany Growth | Goldman Sachs vs. Needham Aggressive Growth |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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