Correlation Between Goldman Sachs and Foreign Trade
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Foreign Trade 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 Foreign Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and Foreign Trade Bank, you can compare the effects of market volatilities on Goldman Sachs and Foreign Trade 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 Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Foreign Trade.
Diversification Opportunities for Goldman Sachs and Foreign Trade
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Foreign is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Bank 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 Group are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Foreign Trade go up and down completely randomly.
Pair Corralation between Goldman Sachs and Foreign Trade
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.19 times more return on investment than Foreign Trade. However, Goldman Sachs is 1.19 times more volatile than Foreign Trade Bank. It trades about 0.13 of its potential returns per unit of risk. Foreign Trade Bank is currently generating about 0.09 per unit of risk. If you would invest 44,758 in Goldman Sachs Group on August 28, 2024 and sell it today you would earn a total of 15,545 from holding Goldman Sachs Group or generate 34.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Foreign Trade Bank
Performance |
| Timeline |
| Goldman Sachs Group |
| Foreign Trade Bank |
Goldman Sachs and Foreign Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Foreign Trade
The main advantage of trading using opposite Goldman Sachs and Foreign Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Foreign Trade 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 Foreign Trade will offset losses from the drop in Foreign Trade's long position.| Goldman Sachs vs. Visa Class A | Goldman Sachs vs. Diamond Hill Investment | Goldman Sachs vs. Distoken Acquisition | Goldman Sachs vs. AllianceBernstein Holding LP |
| Foreign Trade vs. Banco Santander Chile | Foreign Trade vs. Bancolombia SA ADR | Foreign Trade vs. Banco Bradesco SA | Foreign Trade vs. Credicorp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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