Correlation Between Goldman Sachs and Madison Investors
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Madison Investors 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 Madison Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Government and Madison Investors Fund, you can compare the effects of market volatilities on Goldman Sachs and Madison Investors 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 Madison Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Madison Investors.
Diversification Opportunities for Goldman Sachs and Madison Investors
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GOLDMAN and Madison is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Government and Madison Investors Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Investors 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 Government are associated (or correlated) with Madison Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Investors has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Madison Investors go up and down completely randomly.
Pair Corralation between Goldman Sachs and Madison Investors
Assuming the 90 days horizon Goldman Sachs is expected to generate 4.16 times less return on investment than Madison Investors. But when comparing it to its historical volatility, Goldman Sachs Government is 2.42 times less risky than Madison Investors. It trades about 0.05 of its potential returns per unit of risk. Madison Investors Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,743 in Madison Investors Fund on September 2, 2024 and sell it today you would earn a total of 497.00 from holding Madison Investors Fund or generate 18.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Government vs. Madison Investors Fund
Performance |
| Timeline |
| Goldman Sachs Government |
| Madison Investors |
Goldman Sachs and Madison Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Madison Investors
The main advantage of trading using opposite Goldman Sachs and Madison Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Madison Investors 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 Madison Investors will offset losses from the drop in Madison Investors' long position.| Goldman Sachs vs. Oklahoma College Savings | Goldman Sachs vs. Ab Bond Inflation | Goldman Sachs vs. Guidepath Managed Futures | Goldman Sachs vs. Ab Bond Inflation |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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