Correlation Between GOLDMAN SACHS and Walmart
Can any of the company-specific risk be diversified away by investing in both GOLDMAN SACHS and Walmart 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 Walmart 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 Walmart Inc CDR, you can compare the effects of market volatilities on GOLDMAN SACHS and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDMAN SACHS and Walmart.
Diversification Opportunities for GOLDMAN SACHS and Walmart
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GOLDMAN and Walmart is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and Walmart go up and down completely randomly.
Pair Corralation between GOLDMAN SACHS and Walmart
Assuming the 90 days trading horizon GOLDMAN SACHS CDR is expected to generate 1.53 times more return on investment than Walmart. However, GOLDMAN SACHS is 1.53 times more volatile than Walmart Inc CDR. It trades about 0.08 of its potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.12 per unit of risk. If you would invest 1,696 in GOLDMAN SACHS CDR on August 28, 2024 and sell it today you would earn a total of 1,311 from holding GOLDMAN SACHS CDR or generate 77.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLDMAN SACHS CDR vs. Walmart Inc CDR
Performance |
| Timeline |
| GOLDMAN SACHS CDR |
| Walmart Inc CDR |
GOLDMAN SACHS and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLDMAN SACHS and Walmart
The main advantage of trading using opposite GOLDMAN SACHS and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| GOLDMAN SACHS vs. Telus Corp | GOLDMAN SACHS vs. Toronto Dominion Bank | GOLDMAN SACHS vs. Manulife Financial Corp | GOLDMAN SACHS vs. Canadian Natural Resources |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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