Correlation Between Goldman Sachs and First Trust
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs ActiveBeta and First Trust Horizon, you can compare the effects of market volatilities on Goldman Sachs and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and First Trust.
Diversification Opportunities for Goldman Sachs and First Trust
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goldman and First is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and First Trust Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Horizon 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 ActiveBeta are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Horizon has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and First Trust go up and down completely randomly.
Pair Corralation between Goldman Sachs and First Trust
Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to under-perform the First Trust. In addition to that, Goldman Sachs is 1.52 times more volatile than First Trust Horizon. It trades about -0.11 of its total potential returns per unit of risk. First Trust Horizon is currently generating about 0.44 per unit of volatility. If you would invest 3,770 in First Trust Horizon on September 2, 2024 and sell it today you would earn a total of 210.00 from holding First Trust Horizon or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs ActiveBeta vs. First Trust Horizon
Performance |
| Timeline |
| Goldman Sachs ActiveBeta |
| First Trust Horizon |
Goldman Sachs and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and First Trust
The main advantage of trading using opposite Goldman Sachs and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. WisdomTree Europe Quality |
| First Trust vs. First Trust Horizon | First Trust vs. First Trust SSI | First Trust vs. First Trust LongShort | First Trust vs. iShares Currency Hedged |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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