Correlation Between GOLDMAN SACHS and Maple Gold
Can any of the company-specific risk be diversified away by investing in both GOLDMAN SACHS and Maple Gold 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 Maple Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLDMAN SACHS CDR and Maple Gold Mines, you can compare the effects of market volatilities on GOLDMAN SACHS and Maple Gold 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 Maple Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDMAN SACHS and Maple Gold.
Diversification Opportunities for GOLDMAN SACHS and Maple Gold
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOLDMAN and Maple is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR and Maple Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Gold Mines 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 CDR are associated (or correlated) with Maple Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Gold Mines has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and Maple Gold go up and down completely randomly.
Pair Corralation between GOLDMAN SACHS and Maple Gold
Assuming the 90 days trading horizon GOLDMAN SACHS CDR is expected to under-perform the Maple Gold. But the stock apears to be less risky and, when comparing its historical volatility, GOLDMAN SACHS CDR is 4.56 times less risky than Maple Gold. The stock trades about -0.04 of its potential returns per unit of risk. The Maple Gold Mines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Maple Gold Mines on November 27, 2024 and sell it today you would earn a total of 0.50 from holding Maple Gold Mines or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLDMAN SACHS CDR vs. Maple Gold Mines
Performance |
| Timeline |
| GOLDMAN SACHS CDR |
| Maple Gold Mines |
GOLDMAN SACHS and Maple Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLDMAN SACHS and Maple Gold
The main advantage of trading using opposite GOLDMAN SACHS and Maple Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS position performs unexpectedly, Maple Gold 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 Maple Gold will offset losses from the drop in Maple Gold's long position.| GOLDMAN SACHS vs. Enerev5 Metals | GOLDMAN SACHS vs. Black Mammoth Metals | GOLDMAN SACHS vs. Andlauer Healthcare Gr | GOLDMAN SACHS vs. Sun Peak Metals |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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