Correlation Between Goldman Sachs and IShares Healthcare
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and IShares Healthcare 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 IShares Healthcare 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 iShares Healthcare ETF, you can compare the effects of market volatilities on Goldman Sachs and IShares Healthcare 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 IShares Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and IShares Healthcare.
Diversification Opportunities for Goldman Sachs and IShares Healthcare
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and iShares Healthcare ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Healthcare ETF 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 IShares Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Healthcare ETF has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and IShares Healthcare go up and down completely randomly.
Pair Corralation between Goldman Sachs and IShares Healthcare
Given the investment horizon of 90 days Goldman Sachs Future is expected to generate 1.45 times more return on investment than IShares Healthcare. However, Goldman Sachs is 1.45 times more volatile than iShares Healthcare ETF. It trades about 0.03 of its potential returns per unit of risk. iShares Healthcare ETF is currently generating about 0.03 per unit of risk. If you would invest 3,159 in Goldman Sachs Future on August 27, 2024 and sell it today you would earn a total of 436.00 from holding Goldman Sachs Future or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Future vs. iShares Healthcare ETF
Performance |
| Timeline |
| Goldman Sachs Future |
| iShares Healthcare ETF |
Goldman Sachs and IShares Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and IShares Healthcare
The main advantage of trading using opposite Goldman Sachs and IShares Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, IShares Healthcare 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 IShares Healthcare will offset losses from the drop in IShares Healthcare's long position.| Goldman Sachs vs. Goldman Sachs ETF | Goldman Sachs vs. Goldman Sachs Future | Goldman Sachs vs. Goldman Sachs Future | Goldman Sachs vs. Goldman Sachs Future |
| IShares Healthcare vs. Global X Clean | IShares Healthcare vs. Global X Renewable | IShares Healthcare vs. Global X Thematic | IShares Healthcare vs. Global X AgTech |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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