Correlation Between Goldman Sachs and FDCTech
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and FDCTech 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 FDCTech 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 FDCTech, you can compare the effects of market volatilities on Goldman Sachs and FDCTech 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 FDCTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and FDCTech.
Diversification Opportunities for Goldman Sachs and FDCTech
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and FDCTech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and FDCTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDCTech 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 FDCTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDCTech has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and FDCTech go up and down completely randomly.
Pair Corralation between Goldman Sachs and FDCTech
Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 60.3 times less return on investment than FDCTech. But when comparing it to its historical volatility, Goldman Sachs Group is 63.04 times less risky than FDCTech. It trades about 0.13 of its potential returns per unit of risk. FDCTech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.70 in FDCTech on August 29, 2024 and sell it today you would lose (1.20) from holding FDCTech or give up 70.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. FDCTech
Performance |
| Timeline |
| Goldman Sachs Group |
| FDCTech |
Goldman Sachs and FDCTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and FDCTech
The main advantage of trading using opposite Goldman Sachs and FDCTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, FDCTech 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 FDCTech will offset losses from the drop in FDCTech'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 |
| FDCTech vs. Morgan Stanley | FDCTech vs. Goldman Sachs Group | FDCTech vs. Charles Schwab Corp | FDCTech vs. Interactive Brokers Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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