Correlation Between Goldman Sachs and Capital World
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Capital World 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 Capital World 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 Capital World Growth, you can compare the effects of market volatilities on Goldman Sachs and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Capital World.
Diversification Opportunities for Goldman Sachs and Capital World
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOLDMAN and Capital is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Capital World go up and down completely randomly.
Pair Corralation between Goldman Sachs and Capital World
Assuming the 90 days horizon Goldman Sachs Large is expected to generate 1.17 times more return on investment than Capital World. However, Goldman Sachs is 1.17 times more volatile than Capital World Growth. It trades about 0.2 of its potential returns per unit of risk. Capital World Growth is currently generating about -0.02 per unit of risk. If you would invest 1,881 in Goldman Sachs Large on August 26, 2024 and sell it today you would earn a total of 62.00 from holding Goldman Sachs Large or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Large vs. Capital World Growth
Performance |
| Timeline |
| Goldman Sachs Large |
| Capital World Growth |
Goldman Sachs and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Capital World
The main advantage of trading using opposite Goldman Sachs and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
| Capital World vs. Old Westbury Large | Capital World vs. Aqr Large Cap | Capital World vs. Quantitative U S | Capital World vs. Goldman Sachs Large |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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