Correlation Between Prudential Short and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Prudential Short 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 Prudential Short and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Short Duration and Goldman Sachs Equity, you can compare the effects of market volatilities on Prudential Short 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 Prudential Short with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short and Goldman Sachs.
Diversification Opportunities for Prudential Short and Goldman Sachs
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Goldman is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Duration and Goldman Sachs Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Equity and Prudential Short 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 Prudential Short Duration 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 Equity has no effect on the direction of Prudential Short i.e., Prudential Short and Goldman Sachs go up and down completely randomly.
Pair Corralation between Prudential Short and Goldman Sachs
Assuming the 90 days horizon Prudential Short is expected to generate 1.73 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Prudential Short Duration is 3.01 times less risky than Goldman Sachs. It trades about 0.14 of its potential returns per unit of risk. Goldman Sachs Equity is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,381 in Goldman Sachs Equity on September 1, 2024 and sell it today you would earn a total of 431.00 from holding Goldman Sachs Equity or generate 31.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Short Duration vs. Goldman Sachs Equity
Performance |
| Timeline |
| Prudential Short Duration |
| Goldman Sachs Equity |
Prudential Short and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Short and Goldman Sachs
The main advantage of trading using opposite Prudential Short and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short 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.| Prudential Short vs. Fidelity Advisor Financial | Prudential Short vs. Prudential Jennison Financial | Prudential Short vs. Mesirow Financial Small | Prudential Short vs. Mesirow Financial Small |
| Goldman Sachs vs. Legg Mason Partners | Goldman Sachs vs. Metropolitan West High | Goldman Sachs vs. Siit High Yield | Goldman Sachs vs. Prudential Short Duration |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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