Correlation Between Goldman Sachs and EBullion
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and EBullion 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 EBullion 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 EBullion, you can compare the effects of market volatilities on Goldman Sachs and EBullion 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 EBullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and EBullion.
Diversification Opportunities for Goldman Sachs and EBullion
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goldman and EBullion is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and EBullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBullion 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 EBullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBullion has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and EBullion go up and down completely randomly.
Pair Corralation between Goldman Sachs and EBullion
Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 4.82 times less return on investment than EBullion. But when comparing it to its historical volatility, Goldman Sachs Group is 11.67 times less risky than EBullion. It trades about 0.08 of its potential returns per unit of risk. EBullion is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.50 in EBullion on August 29, 2024 and sell it today you would lose (0.38) from holding EBullion or give up 76.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.52% |
| Values | Daily Returns |
Goldman Sachs Group vs. EBullion
Performance |
| Timeline |
| Goldman Sachs Group |
| EBullion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Goldman Sachs and EBullion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and EBullion
The main advantage of trading using opposite Goldman Sachs and EBullion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, EBullion 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 EBullion will offset losses from the drop in EBullion'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 |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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