Correlation Between Goldman Sachs and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Washington 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 Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Equity and Washington Mutual Investors, you can compare the effects of market volatilities on Goldman Sachs and Washington 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Washington Mutual.
Diversification Opportunities for Goldman Sachs and Washington Mutual
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Washington is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Equity and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington 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 Equity are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Washington Mutual go up and down completely randomly.
Pair Corralation between Goldman Sachs and Washington Mutual
Assuming the 90 days horizon Goldman Sachs Equity is expected to generate 0.79 times more return on investment than Washington Mutual. However, Goldman Sachs Equity is 1.26 times less risky than Washington Mutual. It trades about 0.16 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about -0.05 per unit of risk. If you would invest 1,811 in Goldman Sachs Equity on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Goldman Sachs Equity or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Equity vs. Washington Mutual Investors
Performance |
| Timeline |
| Goldman Sachs Equity |
| Washington Mutual |
Goldman Sachs and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Washington Mutual
The main advantage of trading using opposite Goldman Sachs and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Washington 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Goldman Sachs vs. Jp Morgan Smartretirement | Goldman Sachs vs. Wilmington Trust Retirement | Goldman Sachs vs. Sierra E Retirement | Goldman Sachs vs. Fidelity Managed Retirement |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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