Correlation Between Goldman Sachs and WisdomTree
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and WisdomTree 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 WisdomTree 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 WisdomTree, you can compare the effects of market volatilities on Goldman Sachs and WisdomTree 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 WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and WisdomTree.
Diversification Opportunities for Goldman Sachs and WisdomTree
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and WisdomTree is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and WisdomTree go up and down completely randomly.
Pair Corralation between Goldman Sachs and WisdomTree
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.21 times more return on investment than WisdomTree. However, Goldman Sachs is 1.21 times more volatile than WisdomTree. It trades about 0.13 of its potential returns per unit of risk. WisdomTree is currently generating about 0.15 per unit of risk. If you would invest 50,642 in Goldman Sachs Group on August 23, 2024 and sell it today you would earn a total of 8,969 from holding Goldman Sachs Group or generate 17.71% 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. WisdomTree
Performance |
| Timeline |
| Goldman Sachs Group |
| WisdomTree |
Goldman Sachs and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and WisdomTree
The main advantage of trading using opposite Goldman Sachs and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, WisdomTree 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 WisdomTree will offset losses from the drop in WisdomTree's long position.| Goldman Sachs vs. Evercore Partners | Goldman Sachs vs. SCOR PK | Goldman Sachs vs. Aquagold International | Goldman Sachs vs. Small Cap Core |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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