Correlation Between Goldman Sachs and Cullen Enhanced
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Cullen Enhanced 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 Cullen Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Equity and Cullen Enhanced Equity, you can compare the effects of market volatilities on Goldman Sachs and Cullen Enhanced 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 Cullen Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Cullen Enhanced.
Diversification Opportunities for Goldman Sachs and Cullen Enhanced
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Cullen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Equity and Cullen Enhanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Enhanced Equity 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 Equity are associated (or correlated) with Cullen Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Enhanced Equity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Cullen Enhanced go up and down completely randomly.
Pair Corralation between Goldman Sachs and Cullen Enhanced
Assuming the 90 days horizon Goldman Sachs Equity is expected to generate 1.1 times more return on investment than Cullen Enhanced. However, Goldman Sachs is 1.1 times more volatile than Cullen Enhanced Equity. It trades about 0.08 of its potential returns per unit of risk. Cullen Enhanced Equity is currently generating about 0.04 per unit of risk. If you would invest 1,380 in Goldman Sachs Equity on August 26, 2024 and sell it today you would earn a total of 427.00 from holding Goldman Sachs Equity or generate 30.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Equity vs. Cullen Enhanced Equity
Performance |
| Timeline |
| Goldman Sachs Equity |
| Cullen Enhanced Equity |
Goldman Sachs and Cullen Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Cullen Enhanced
The main advantage of trading using opposite Goldman Sachs and Cullen Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Cullen Enhanced 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 Cullen Enhanced will offset losses from the drop in Cullen Enhanced's long position.| Goldman Sachs vs. William Blair Large | Goldman Sachs vs. Morningstar Unconstrained Allocation | Goldman Sachs vs. Rational Strategic Allocation | Goldman Sachs vs. Nuveen Winslow Large Cap |
| Cullen Enhanced vs. Cullen Small Cap | Cullen Enhanced vs. Cullen Small Cap | Cullen Enhanced vs. Cullen Small Cap | Cullen Enhanced vs. Cullen Value Fund |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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