Correlation Between Small Cap and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Small Cap and Goldman Sachs 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 Small Cap and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Goldman Sachs Equity, you can compare the effects of market volatilities on Small Cap and Goldman Sachs 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 Small Cap with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Goldman Sachs.
Diversification Opportunities for Small Cap and Goldman Sachs
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and GOLDMAN is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity and Small Cap 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 Small Cap Equity are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Equity has no effect on the direction of Small Cap i.e., Small Cap and Goldman Sachs go up and down completely randomly.
Pair Corralation between Small Cap and Goldman Sachs
Assuming the 90 days horizon Small Cap is expected to generate 1.87 times less return on investment than Goldman Sachs. In addition to that, Small Cap is 1.67 times more volatile than Goldman Sachs Equity. It trades about 0.02 of its total potential returns per unit of risk. Goldman Sachs Equity is currently generating about 0.07 per unit of volatility. If you would invest 1,366 in Goldman Sachs Equity on October 25, 2024 and sell it today you would earn a total of 380.00 from holding Goldman Sachs Equity or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Goldman Sachs Equity
Performance |
| Timeline |
| Small Cap Equity |
| Goldman Sachs Equity |
Small Cap and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Goldman Sachs
The main advantage of trading using opposite Small Cap and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Small Cap vs. Rbc Global Equity | Small Cap vs. Dreyfusstandish Global Fixed | Small Cap vs. Wisdomtree Siegel Global | Small Cap vs. Templeton Global Balanced |
| Goldman Sachs vs. Glg Intl Small | Goldman Sachs vs. Rbc Small Cap | Goldman Sachs vs. Vy Columbia Small | Goldman Sachs vs. Sp Smallcap 600 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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