Correlation Between Nasdaq and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and The Goldman Sachs, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Goldman Sachs.
Diversification Opportunities for Nasdaq and Goldman Sachs
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Goldman is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Nasdaq 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 Nasdaq Inc 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 has no effect on the direction of Nasdaq i.e., Nasdaq and Goldman Sachs go up and down completely randomly.
Pair Corralation between Nasdaq and Goldman Sachs
Given the investment horizon of 90 days Nasdaq is expected to generate 1.85 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Nasdaq Inc is 1.55 times less risky than Goldman Sachs. It trades about 0.14 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 565,603 in The Goldman Sachs on September 14, 2024 and sell it today you would earn a total of 623,293 from holding The Goldman Sachs or generate 110.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.26% |
| Values | Daily Returns |
Nasdaq Inc vs. The Goldman Sachs
Performance |
| Timeline |
| Nasdaq Inc |
| Goldman Sachs |
Nasdaq and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Goldman Sachs
The main advantage of trading using opposite Nasdaq and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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.The idea behind Nasdaq Inc and The Goldman Sachs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Goldman Sachs vs. New Oriental Education | Goldman Sachs vs. Ameriprise Financial | Goldman Sachs vs. FibraHotel | Goldman Sachs vs. Grupo Hotelero Santa |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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