Correlation Between Goldman Sachs and Visa
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Visa 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 Visa 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 Visa Class A, you can compare the effects of market volatilities on Goldman Sachs and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Visa.
Diversification Opportunities for Goldman Sachs and Visa
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Visa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Visa go up and down completely randomly.
Pair Corralation between Goldman Sachs and Visa
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.57 times more return on investment than Visa. However, Goldman Sachs is 1.57 times more volatile than Visa Class A. It trades about 0.13 of its potential returns per unit of risk. Visa Class A is currently generating about 0.08 per unit of risk. If you would invest 30,890 in Goldman Sachs Group on August 28, 2024 and sell it today you would earn a total of 29,413 from holding Goldman Sachs Group or generate 95.22% 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. Visa Class A
Performance |
| Timeline |
| Goldman Sachs Group |
| Visa Class A |
Goldman Sachs and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Visa
The main advantage of trading using opposite Goldman Sachs and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa'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 |
| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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