Correlation Between Goldman Sachs and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Gmo Emerging 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 Gmo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Large and Gmo Emerging Markets, you can compare the effects of market volatilities on Goldman Sachs and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Gmo Emerging.
Diversification Opportunities for Goldman Sachs and Gmo Emerging
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Gmo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Large are associated (or correlated) with Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Gmo Emerging go up and down completely randomly.
Pair Corralation between Goldman Sachs and Gmo Emerging
Assuming the 90 days horizon Goldman Sachs Large is expected to generate 1.12 times more return on investment than Gmo Emerging. However, Goldman Sachs is 1.12 times more volatile than Gmo Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about -0.23 per unit of risk. If you would invest 1,868 in Goldman Sachs Large on September 3, 2024 and sell it today you would earn a total of 101.00 from holding Goldman Sachs Large or generate 5.41% 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 Large vs. Gmo Emerging Markets
Performance |
| Timeline |
| Goldman Sachs Large |
| Gmo Emerging Markets |
Goldman Sachs and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Gmo Emerging
The main advantage of trading using opposite Goldman Sachs and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Goldman Sachs vs. Fidelity Advisor Energy | Goldman Sachs vs. Icon Natural Resources | Goldman Sachs vs. Energy Basic Materials | Goldman Sachs vs. Clearbridge Energy Mlp |
| Gmo Emerging vs. Franklin Mutual Global | Gmo Emerging vs. Templeton Growth Fund | Gmo Emerging vs. Franklin Real Estate | Gmo Emerging vs. HUMANA INC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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