Correlation Between Goldman Sachs and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Emerging and Wells Fargo Emerging, you can compare the effects of market volatilities on Goldman Sachs and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Wells Fargo.
Diversification Opportunities for Goldman Sachs and Wells Fargo
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goldman and Wells is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Emerging and Wells Fargo Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Emerging 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 Emerging are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Emerging has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Wells Fargo go up and down completely randomly.
Pair Corralation between Goldman Sachs and Wells Fargo
Assuming the 90 days horizon Goldman Sachs Emerging is expected to generate 0.49 times more return on investment than Wells Fargo. However, Goldman Sachs Emerging is 2.05 times less risky than Wells Fargo. It trades about 0.11 of its potential returns per unit of risk. Wells Fargo Emerging is currently generating about 0.04 per unit of risk. If you would invest 782.00 in Goldman Sachs Emerging on September 14, 2024 and sell it today you would earn a total of 198.00 from holding Goldman Sachs Emerging or generate 25.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Emerging vs. Wells Fargo Emerging
Performance |
| Timeline |
| Goldman Sachs Emerging |
| Wells Fargo Emerging |
Goldman Sachs and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Wells Fargo
The main advantage of trading using opposite Goldman Sachs and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Goldman Sachs vs. Gamco Global Gold | Goldman Sachs vs. Great West Goldman Sachs | Goldman Sachs vs. Short Precious Metals | Goldman Sachs vs. Sprott Gold Equity |
| Wells Fargo vs. Jpmorgan Mid Cap | Wells Fargo vs. Goldman Sachs Emerging | Wells Fargo vs. Massachusetts Investors Trust | Wells Fargo vs. Delaware Emerging Markets |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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