Correlation Between Transamerica Financial and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Transamerica Financial 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 Transamerica Financial and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica Financial Life and Goldman Sachs Strategic, you can compare the effects of market volatilities on Transamerica Financial 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 Transamerica Financial with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Financial and Goldman Sachs.
Diversification Opportunities for Transamerica Financial and Goldman Sachs
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transamerica and Goldman is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Goldman Sachs Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Strategic and Transamerica Financial 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 Transamerica Financial Life 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 Strategic has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Goldman Sachs go up and down completely randomly.
Pair Corralation between Transamerica Financial and Goldman Sachs
Assuming the 90 days horizon Transamerica Financial Life is expected to generate 3.83 times more return on investment than Goldman Sachs. However, Transamerica Financial is 3.83 times more volatile than Goldman Sachs Strategic. It trades about 0.05 of its potential returns per unit of risk. Goldman Sachs Strategic is currently generating about 0.14 per unit of risk. If you would invest 1,045 in Transamerica Financial Life on September 3, 2024 and sell it today you would earn a total of 198.00 from holding Transamerica Financial Life or generate 18.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Financial Life vs. Goldman Sachs Strategic
Performance |
| Timeline |
| Transamerica Financial |
| Goldman Sachs Strategic |
Transamerica Financial and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Financial and Goldman Sachs
The main advantage of trading using opposite Transamerica Financial and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial 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.| Transamerica Financial vs. Aig Government Money | Transamerica Financial vs. John Hancock Money | Transamerica Financial vs. First American Funds | Transamerica Financial vs. Matson Money Equity |
| Goldman Sachs vs. Blackrock Strategic Opps | Goldman Sachs vs. Blackrock Strategic Income | Goldman Sachs vs. Jpmorgan Strategic Income | Goldman Sachs vs. Jpmorgan Strategic Income |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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