Correlation Between Goldman Sachs and Alternative Asset
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Alternative Asset 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 Alternative Asset 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 Alternative Asset Allocation, you can compare the effects of market volatilities on Goldman Sachs and Alternative Asset 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 Alternative Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Alternative Asset.
Diversification Opportunities for Goldman Sachs and Alternative Asset
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Alternative is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Large and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset 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 Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Alternative Asset go up and down completely randomly.
Pair Corralation between Goldman Sachs and Alternative Asset
Assuming the 90 days horizon Goldman Sachs Large is expected to generate 3.38 times more return on investment than Alternative Asset. However, Goldman Sachs is 3.38 times more volatile than Alternative Asset Allocation. It trades about 0.08 of its potential returns per unit of risk. Alternative Asset Allocation is currently generating about 0.11 per unit of risk. If you would invest 1,464 in Goldman Sachs Large on September 1, 2024 and sell it today you would earn a total of 416.00 from holding Goldman Sachs Large or generate 28.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Goldman Sachs Large vs. Alternative Asset Allocation
Performance |
| Timeline |
| Goldman Sachs Large |
| Alternative Asset |
Goldman Sachs and Alternative Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Alternative Asset
The main advantage of trading using opposite Goldman Sachs and Alternative Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Alternative Asset 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 Alternative Asset will offset losses from the drop in Alternative Asset'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 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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