Correlation Between Northern Lights and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Northern Lights 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 Northern Lights and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Lights and Goldman Sachs MarketBeta, you can compare the effects of market volatilities on Northern Lights 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 Northern Lights with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Lights and Goldman Sachs.
Diversification Opportunities for Northern Lights and Goldman Sachs
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Goldman is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Northern Lights and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and Northern Lights 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 Northern Lights 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 MarketBeta has no effect on the direction of Northern Lights i.e., Northern Lights and Goldman Sachs go up and down completely randomly.
Pair Corralation between Northern Lights and Goldman Sachs
Given the investment horizon of 90 days Northern Lights is expected to generate 0.67 times more return on investment than Goldman Sachs. However, Northern Lights is 1.48 times less risky than Goldman Sachs. It trades about 0.32 of its potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about -0.11 per unit of risk. If you would invest 3,436 in Northern Lights on September 2, 2024 and sell it today you would earn a total of 159.00 from holding Northern Lights or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Lights vs. Goldman Sachs MarketBeta
Performance |
| Timeline |
| Northern Lights |
| Goldman Sachs MarketBeta |
Northern Lights and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Lights and Goldman Sachs
The main advantage of trading using opposite Northern Lights and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Lights 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.| Northern Lights vs. Sterling Capital Focus | Northern Lights vs. Roundhill ETF Trust | Northern Lights vs. Northern Lights | Northern Lights vs. First Trust Exchange Traded |
| Goldman Sachs vs. FT Vest Equity | Goldman Sachs vs. Northern Lights | Goldman Sachs vs. Dimensional International High | Goldman Sachs vs. Matthews China Discovery |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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