Correlation Between Inflation Protected and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Inflation Protected 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 Inflation Protected and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Goldman Sachs Bond, you can compare the effects of market volatilities on Inflation Protected 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 Inflation Protected with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protected and Goldman Sachs.
Diversification Opportunities for Inflation Protected and Goldman Sachs
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inflation and Goldman is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Goldman Sachs Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Bond and Inflation Protected 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 Inflation Protected Bond Fund 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 Bond has no effect on the direction of Inflation Protected i.e., Inflation Protected and Goldman Sachs go up and down completely randomly.
Pair Corralation between Inflation Protected and Goldman Sachs
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 1.28 times more return on investment than Goldman Sachs. However, Inflation Protected is 1.28 times more volatile than Goldman Sachs Bond. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Bond is currently generating about 0.07 per unit of risk. If you would invest 922.00 in Inflation Protected Bond Fund on September 3, 2024 and sell it today you would earn a total of 134.00 from holding Inflation Protected Bond Fund or generate 14.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Goldman Sachs Bond
Performance |
| Timeline |
| Inflation Protected |
| Goldman Sachs Bond |
Inflation Protected and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Protected and Goldman Sachs
The main advantage of trading using opposite Inflation Protected and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protected 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.| Inflation Protected vs. First American Funds | Inflation Protected vs. Hsbc Treasury Money | Inflation Protected vs. Janus Investment | Inflation Protected vs. General Money Market |
| Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. Semiconductor Ultrasector Profund | Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. Growth Strategy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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