Correlation Between Goldman Sachs and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Goldman Sachs and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Dow Jones.
Diversification Opportunities for Goldman Sachs and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Dow Jones go up and down completely randomly.
Pair Corralation between Goldman Sachs and Dow Jones
Assuming the 90 days trading horizon Goldman Sachs ActiveBeta is expected to generate 1.09 times more return on investment than Dow Jones. However, Goldman Sachs is 1.09 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 6,274 in Goldman Sachs ActiveBeta on August 27, 2024 and sell it today you would earn a total of 2,013 from holding Goldman Sachs ActiveBeta or generate 32.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Goldman Sachs ActiveBeta vs. Dow Jones Industrial
Performance |
| Timeline |
Goldman Sachs and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Goldman Sachs ActiveBeta
Pair trading matchups for Goldman Sachs
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Goldman Sachs and Dow Jones
The main advantage of trading using opposite Goldman Sachs and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Goldman Sachs vs. Leverage Shares 3x | Goldman Sachs vs. Leverage Shares 3x | Goldman Sachs vs. Leverage Shares 3x | Goldman Sachs vs. WisdomTree Short GBP |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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