Correlation Between Multi-manager High and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Multi-manager High 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 Multi-manager High and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager High Yield and Goldman Sachs Enhanced, you can compare the effects of market volatilities on Multi-manager High 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 Multi-manager High with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-manager High and Goldman Sachs.
Diversification Opportunities for Multi-manager High and Goldman Sachs
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multi-manager and Goldman is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager High Yield and Goldman Sachs Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Enhanced and Multi-manager High 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 Multi Manager High Yield 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 Enhanced has no effect on the direction of Multi-manager High i.e., Multi-manager High and Goldman Sachs go up and down completely randomly.
Pair Corralation between Multi-manager High and Goldman Sachs
Assuming the 90 days horizon Multi-manager High is expected to generate 7.01 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Multi Manager High Yield is 3.34 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Enhanced is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,401 in Goldman Sachs Enhanced on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Goldman Sachs Enhanced or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager High Yield vs. Goldman Sachs Enhanced
Performance |
| Timeline |
| Multi Manager High |
| Goldman Sachs Enhanced |
Multi-manager High and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-manager High and Goldman Sachs
The main advantage of trading using opposite Multi-manager High and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-manager High 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.| Multi-manager High vs. Commonwealth Global Fund | Multi-manager High vs. Dreyfusstandish Global Fixed | Multi-manager High vs. Rbc Global Opportunities | Multi-manager High vs. Us Global Leaders |
| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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