Correlation Between Goldman Sachs and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Touchstone Small 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 Touchstone Small 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 Touchstone Small Cap, you can compare the effects of market volatilities on Goldman Sachs and Touchstone Small 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 Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Touchstone Small.
Diversification Opportunities for Goldman Sachs and Touchstone Small
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Touchstone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap 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 Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Touchstone Small go up and down completely randomly.
Pair Corralation between Goldman Sachs and Touchstone Small
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.67 times less return on investment than Touchstone Small. But when comparing it to its historical volatility, Goldman Sachs Large is 1.95 times less risky than Touchstone Small. It trades about 0.27 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,865 in Touchstone Small Cap on August 31, 2024 and sell it today you would earn a total of 304.00 from holding Touchstone Small Cap or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Large vs. Touchstone Small Cap
Performance |
| Timeline |
| Goldman Sachs Large |
| Touchstone Small Cap |
Goldman Sachs and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Touchstone Small
The main advantage of trading using opposite Goldman Sachs and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Touchstone Small 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 Touchstone Small will offset losses from the drop in Touchstone Small's long position.| Goldman Sachs vs. Davis Financial Fund | Goldman Sachs vs. Fidelity Advisor Financial | Goldman Sachs vs. Vanguard Financials Index | Goldman Sachs vs. Mesirow Financial Small |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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