Correlation Between Goldman Sachs and Small Cap
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Strategic and Small Cap Equity, you can compare the effects of market volatilities on Goldman Sachs and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Small Cap.
Diversification Opportunities for Goldman Sachs and Small Cap
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Small is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Strategic and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity 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 Strategic are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Small Cap go up and down completely randomly.
Pair Corralation between Goldman Sachs and Small Cap
Assuming the 90 days horizon Goldman Sachs Strategic is expected to generate 0.13 times more return on investment than Small Cap. However, Goldman Sachs Strategic is 7.68 times less risky than Small Cap. It trades about 0.31 of its potential returns per unit of risk. Small Cap Equity is currently generating about -0.07 per unit of risk. If you would invest 922.00 in Goldman Sachs Strategic on November 6, 2024 and sell it today you would earn a total of 26.00 from holding Goldman Sachs Strategic or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Strategic vs. Small Cap Equity
Performance |
| Timeline |
| Goldman Sachs Strategic |
| Small Cap Equity |
Goldman Sachs and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Small Cap
The main advantage of trading using opposite Goldman Sachs and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Goldman Sachs vs. Rational Defensive Growth | Goldman Sachs vs. Vanguard Growth And | Goldman Sachs vs. Barings Active Short | Goldman Sachs vs. Gmo Quality Fund |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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