Correlation Between Goldman Sachs and Invesco China
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Invesco China 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 Invesco China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Future and Invesco China Technology, you can compare the effects of market volatilities on Goldman Sachs and Invesco China 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 Invesco China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Invesco China.
Diversification Opportunities for Goldman Sachs and Invesco China
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Invesco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Invesco China Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco China Technology 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 Future are associated (or correlated) with Invesco China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco China Technology has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Invesco China go up and down completely randomly.
Pair Corralation between Goldman Sachs and Invesco China
Given the investment horizon of 90 days Goldman Sachs Future is expected to generate 0.27 times more return on investment than Invesco China. However, Goldman Sachs Future is 3.76 times less risky than Invesco China. It trades about 0.19 of its potential returns per unit of risk. Invesco China Technology is currently generating about -0.01 per unit of risk. If you would invest 3,563 in Goldman Sachs Future on September 3, 2024 and sell it today you would earn a total of 103.00 from holding Goldman Sachs Future or generate 2.89% 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 Future vs. Invesco China Technology
Performance |
| Timeline |
| Goldman Sachs Future |
| Invesco China Technology |
Goldman Sachs and Invesco China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Invesco China
The main advantage of trading using opposite Goldman Sachs and Invesco China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Invesco China 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 Invesco China will offset losses from the drop in Invesco China's long position.| Goldman Sachs vs. Managed Account Series | Goldman Sachs vs. Fidelity Sai International | Goldman Sachs vs. Schwab Strategic Trust | Goldman Sachs vs. Inpex Corp ADR |
| Invesco China vs. Franklin FTSE South | Invesco China vs. Franklin FTSE Japan | Invesco China vs. Franklin FTSE India | Invesco China vs. Franklin FTSE Brazil |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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