Correlation Between Goldman Sachs and Payden High
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Payden High 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 Payden High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Asia and Payden High Income, you can compare the effects of market volatilities on Goldman Sachs and Payden High 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 Payden High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Payden High.
Diversification Opportunities for Goldman Sachs and Payden High
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Payden is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Asia and Payden High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden High Income 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 Asia are associated (or correlated) with Payden High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden High Income has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Payden High go up and down completely randomly.
Pair Corralation between Goldman Sachs and Payden High
Assuming the 90 days horizon Goldman Sachs Asia is expected to generate 11.1 times more return on investment than Payden High. However, Goldman Sachs is 11.1 times more volatile than Payden High Income. It trades about 0.31 of its potential returns per unit of risk. Payden High Income is currently generating about 0.06 per unit of risk. If you would invest 2,192 in Goldman Sachs Asia on December 8, 2024 and sell it today you would earn a total of 222.00 from holding Goldman Sachs Asia or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Asia vs. Payden High Income
Performance |
| Timeline |
| Goldman Sachs Asia |
| Payden High Income |
Goldman Sachs and Payden High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Payden High
The main advantage of trading using opposite Goldman Sachs and Payden High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Payden High 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 Payden High will offset losses from the drop in Payden High's long position.| Goldman Sachs vs. Inverse Government Long | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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