Correlation Between Goldman Sachs and Gold Bullion
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Gold Bullion 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 Gold Bullion 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 The Gold Bullion, you can compare the effects of market volatilities on Goldman Sachs and Gold Bullion 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 Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Gold Bullion.
Diversification Opportunities for Goldman Sachs and Gold Bullion
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Gold is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Strategic and The Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion 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 Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Gold Bullion go up and down completely randomly.
Pair Corralation between Goldman Sachs and Gold Bullion
Assuming the 90 days horizon Goldman Sachs is expected to generate 2.5 times less return on investment than Gold Bullion. But when comparing it to its historical volatility, Goldman Sachs Strategic is 4.14 times less risky than Gold Bullion. It trades about 0.14 of its potential returns per unit of risk. The Gold Bullion is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,509 in The Gold Bullion on November 5, 2024 and sell it today you would earn a total of 669.00 from holding The Gold Bullion or generate 44.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Strategic vs. The Gold Bullion
Performance |
| Timeline |
| Goldman Sachs Strategic |
| Gold Bullion |
Goldman Sachs and Gold Bullion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Gold Bullion
The main advantage of trading using opposite Goldman Sachs and Gold Bullion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Gold Bullion 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 Gold Bullion will offset losses from the drop in Gold Bullion's long position.| Goldman Sachs vs. Arrow Managed Futures | Goldman Sachs vs. Ab Bond Inflation | Goldman Sachs vs. Abbey Capital Futures | Goldman Sachs vs. Credit Suisse Multialternative |
| Gold Bullion vs. Quantified Market Leaders | Gold Bullion vs. Quantified Managed Income | Gold Bullion vs. Quantified Alternative Investment | Gold Bullion vs. Quantified Stf Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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