Correlation Between Goldman Sachs and US Global
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and US Global 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 US Global 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 US Global Sea, you can compare the effects of market volatilities on Goldman Sachs and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and US Global.
Diversification Opportunities for Goldman Sachs and US Global
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and SEA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Sea has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and US Global go up and down completely randomly.
Pair Corralation between Goldman Sachs and US Global
Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.58 times less return on investment than US Global. But when comparing it to its historical volatility, Goldman Sachs Future is 1.11 times less risky than US Global. It trades about 0.03 of its potential returns per unit of risk. US Global Sea is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,252 in US Global Sea on September 2, 2024 and sell it today you would earn a total of 317.00 from holding US Global Sea or generate 25.32% 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. US Global Sea
Performance |
| Timeline |
| Goldman Sachs Future |
| US Global Sea |
Goldman Sachs and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and US Global
The main advantage of trading using opposite Goldman Sachs and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| Goldman Sachs vs. SPDR Kensho New | Goldman Sachs vs. Global X FinTech | Goldman Sachs vs. Invesco SP SmallCap | Goldman Sachs vs. iShares Genomics Immunology |
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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