Correlation Between Goldman Sachs and Federal Home
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Federal Home 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 Federal Home 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 Federal Home Loan, you can compare the effects of market volatilities on Goldman Sachs and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Federal Home.
Diversification Opportunities for Goldman Sachs and Federal Home
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Federal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Federal Home go up and down completely randomly.
Pair Corralation between Goldman Sachs and Federal Home
Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 5.83 times less return on investment than Federal Home. But when comparing it to its historical volatility, Goldman Sachs Group is 3.56 times less risky than Federal Home. It trades about 0.22 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 144.00 in Federal Home Loan on August 24, 2024 and sell it today you would earn a total of 164.00 from holding Federal Home Loan or generate 113.89% 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. Federal Home Loan
Performance |
| Timeline |
| Goldman Sachs Group |
| Federal Home Loan |
Goldman Sachs and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Federal Home
The main advantage of trading using opposite Goldman Sachs and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Goldman Sachs vs. SCOR PK | Goldman Sachs vs. Aquagold International | Goldman Sachs vs. Small Cap Core | Goldman Sachs vs. Morningstar Unconstrained Allocation |
| Federal Home vs. Encore Capital Group | Federal Home vs. Greystone Housing Impact | Federal Home vs. Guild Holdings Co | Federal Home vs. Security National Financial |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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