Correlation Between Gotham Large and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Gotham Large and Goldman Sachs 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 Gotham Large and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gotham Large Value and Goldman Sachs MarketBeta, you can compare the effects of market volatilities on Gotham Large and Goldman Sachs 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 Gotham Large with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gotham Large and Goldman Sachs.
Diversification Opportunities for Gotham Large and Goldman Sachs
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gotham and Goldman is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Large Value and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and Gotham Large 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 Gotham Large Value are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs MarketBeta has no effect on the direction of Gotham Large i.e., Gotham Large and Goldman Sachs go up and down completely randomly.
Pair Corralation between Gotham Large and Goldman Sachs
Assuming the 90 days horizon Gotham Large is expected to generate 1.09 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Gotham Large Value is 1.24 times less risky than Goldman Sachs. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7,189 in Goldman Sachs MarketBeta on September 1, 2024 and sell it today you would earn a total of 1,119 from holding Goldman Sachs MarketBeta or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gotham Large Value vs. Goldman Sachs MarketBeta
Performance |
| Timeline |
| Gotham Large Value |
| Goldman Sachs MarketBeta |
Gotham Large and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gotham Large and Goldman Sachs
The main advantage of trading using opposite Gotham Large and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotham Large position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Gotham Large vs. Gotham Index Plus | Gotham Large vs. Gotham Enhanced 500 | Gotham Large vs. Gotham Enhanced Return | Gotham Large vs. Aquagold International |
| Goldman Sachs vs. Vanguard Total Stock | Goldman Sachs vs. SPDR SP 500 | Goldman Sachs vs. iShares Core SP | Goldman Sachs vs. Vanguard Dividend Appreciation |
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 CEOs Directory module to screen CEOs from public companies around the world.
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