Correlation Between First Trust and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Tactical and Goldman Sachs Access, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Goldman Sachs.
Diversification Opportunities for First Trust and Goldman Sachs
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Goldman is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Tactical and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access and First Trust 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 First Trust Tactical 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 Access has no effect on the direction of First Trust i.e., First Trust and Goldman Sachs go up and down completely randomly.
Pair Corralation between First Trust and Goldman Sachs
Given the investment horizon of 90 days First Trust is expected to generate 1.08 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, First Trust Tactical is 1.16 times less risky than Goldman Sachs. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,781 in Goldman Sachs Access on September 2, 2024 and sell it today you would earn a total of 760.00 from holding Goldman Sachs Access or generate 20.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Tactical vs. Goldman Sachs Access
Performance |
| Timeline |
| First Trust Tactical |
| Goldman Sachs Access |
First Trust and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Goldman Sachs
The main advantage of trading using opposite First Trust and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Senior | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust TCW |
| Goldman Sachs vs. Goldman Sachs Access | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs Access |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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