Correlation Between Goldman Sachs and Arcelormittal
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Arcelormittal 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 Arcelormittal 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 Arcelormittal, you can compare the effects of market volatilities on Goldman Sachs and Arcelormittal 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 Arcelormittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Arcelormittal.
Diversification Opportunities for Goldman Sachs and Arcelormittal
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goldman and Arcelormittal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Arcelormittal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcelormittal 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 Arcelormittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcelormittal has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Arcelormittal go up and down completely randomly.
Pair Corralation between Goldman Sachs and Arcelormittal
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.72 times more return on investment than Arcelormittal. However, Goldman Sachs Group is 1.39 times less risky than Arcelormittal. It trades about 0.12 of its potential returns per unit of risk. Arcelormittal is currently generating about -0.21 per unit of risk. If you would invest 31,275 in Goldman Sachs Group on August 30, 2024 and sell it today you would earn a total of 29,268 from holding Goldman Sachs Group or generate 93.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.28% |
| Values | Daily Returns |
Goldman Sachs Group vs. Arcelormittal
Performance |
| Timeline |
| Goldman Sachs Group |
| Arcelormittal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Goldman Sachs and Arcelormittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Arcelormittal
The main advantage of trading using opposite Goldman Sachs and Arcelormittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Arcelormittal 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 Arcelormittal will offset losses from the drop in Arcelormittal's long position.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
| Arcelormittal vs. Affiliated Managers Group | Arcelormittal vs. Maiden Holdings North | Arcelormittal vs. Credit Enhanced Corts | Arcelormittal vs. Affiliated Managers 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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