Correlation Between Goldman Sachs and First Trust
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and First Trust 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 First Trust 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 First Trust Equity, you can compare the effects of market volatilities on Goldman Sachs and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and First Trust.
Diversification Opportunities for Goldman Sachs and First Trust
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goldman and First is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and First Trust Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Equity 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Equity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and First Trust go up and down completely randomly.
Pair Corralation between Goldman Sachs and First Trust
Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Goldman Sachs Future is 2.08 times less risky than First Trust. The etf trades about -0.03 of its potential returns per unit of risk. The First Trust Equity is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 11,346 in First Trust Equity on August 28, 2024 and sell it today you would earn a total of 1,477 from holding First Trust Equity or generate 13.02% 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. First Trust Equity
Performance |
| Timeline |
| Goldman Sachs Future |
| First Trust Equity |
Goldman Sachs and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and First Trust
The main advantage of trading using opposite Goldman Sachs and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Goldman Sachs vs. SPDR Kensho New | Goldman Sachs vs. Global X FinTech | Goldman Sachs vs. iShares Genomics Immunology | Goldman Sachs vs. Aquagold International |
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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 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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