Correlation Between Goldman Sachs and Northern Trust
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Northern Trust 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 Northern Trust 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 Northern Trust, you can compare the effects of market volatilities on Goldman Sachs and Northern Trust 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Northern Trust.
Diversification Opportunities for Goldman Sachs and Northern Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Northern is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Northern Trust go up and down completely randomly.
Pair Corralation between Goldman Sachs and Northern Trust
Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 1.07 times less return on investment than Northern Trust. In addition to that, Goldman Sachs is 1.26 times more volatile than Northern Trust. It trades about 0.12 of its total potential returns per unit of risk. Northern Trust is currently generating about 0.16 per unit of volatility. If you would invest 8,066 in Northern Trust on August 24, 2024 and sell it today you would earn a total of 2,828 from holding Northern Trust or generate 35.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Northern Trust
Performance |
| Timeline |
| Goldman Sachs Group |
| Northern Trust |
Goldman Sachs and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Northern Trust
The main advantage of trading using opposite Goldman Sachs and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Northern Trust 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 Northern Trust will offset losses from the drop in Northern Trust'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 |
| Northern Trust vs. Bank of New | Northern Trust vs. Invesco Plc | Northern Trust vs. Franklin Resources | Northern Trust vs. T Rowe Price |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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