Correlation Between Lifestyle and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Lifestyle 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 Lifestyle and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Growth and Goldman Sachs Mid, you can compare the effects of market volatilities on Lifestyle 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 Lifestyle with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Goldman Sachs.
Diversification Opportunities for Lifestyle and Goldman Sachs
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lifestyle and Goldman is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Growth and Goldman Sachs Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mid and Lifestyle 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 Lifestyle Ii Growth 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 Mid has no effect on the direction of Lifestyle i.e., Lifestyle and Goldman Sachs go up and down completely randomly.
Pair Corralation between Lifestyle and Goldman Sachs
Assuming the 90 days horizon Lifestyle is expected to generate 2.31 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Lifestyle Ii Growth is 1.19 times less risky than Goldman Sachs. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Mid is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,491 in Goldman Sachs Mid on October 25, 2024 and sell it today you would earn a total of 108.00 from holding Goldman Sachs Mid or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Lifestyle Ii Growth vs. Goldman Sachs Mid
Performance |
| Timeline |
| Lifestyle Ii Growth |
| Goldman Sachs Mid |
Lifestyle and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Goldman Sachs
The main advantage of trading using opposite Lifestyle and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle 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.| Lifestyle vs. Advent Claymore Convertible | Lifestyle vs. Absolute Convertible Arbitrage | Lifestyle vs. Columbia Convertible Securities | Lifestyle vs. Rationalpier 88 Convertible |
| Goldman Sachs vs. Gabelli Global Financial | Goldman Sachs vs. Prudential Financial Services | Goldman Sachs vs. Vanguard Financials Index | Goldman Sachs vs. Financials Ultrasector Profund |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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