Correlation Between Goldman Sachs and American Mutual
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and American Mutual 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 American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Large and American Mutual Fund, you can compare the effects of market volatilities on Goldman Sachs and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and American Mutual.
Diversification Opportunities for Goldman Sachs and American Mutual
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 Large are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Mutual go up and down completely randomly.
Pair Corralation between Goldman Sachs and American Mutual
Assuming the 90 days horizon Goldman Sachs Large is expected to generate 1.22 times more return on investment than American Mutual. However, Goldman Sachs is 1.22 times more volatile than American Mutual Fund. It trades about 0.34 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.24 per unit of risk. If you would invest 1,779 in Goldman Sachs Large on September 1, 2024 and sell it today you would earn a total of 101.00 from holding Goldman Sachs Large or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Goldman Sachs Large vs. American Mutual Fund
Performance |
| Timeline |
| Goldman Sachs Large |
| American Mutual |
Goldman Sachs and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and American Mutual
The main advantage of trading using opposite Goldman Sachs and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
| American Mutual vs. T Rowe Price | American Mutual vs. Enhanced Large Pany | American Mutual vs. Alternative Asset Allocation | American Mutual vs. Morningstar Unconstrained Allocation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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