Correlation Between Old Westbury and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Old Westbury 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 Old Westbury and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Large and Goldman Sachs Large, you can compare the effects of market volatilities on Old Westbury 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 Old Westbury with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Goldman Sachs.
Diversification Opportunities for Old Westbury and Goldman Sachs
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large and Old Westbury 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 Old Westbury Large 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 Large has no effect on the direction of Old Westbury i.e., Old Westbury and Goldman Sachs go up and down completely randomly.
Pair Corralation between Old Westbury and Goldman Sachs
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.05 times more return on investment than Goldman Sachs. However, Old Westbury is 1.05 times more volatile than Goldman Sachs Large. It trades about 0.03 of its potential returns per unit of risk. Goldman Sachs Large is currently generating about -0.14 per unit of risk. If you would invest 2,025 in Old Westbury Large on November 27, 2024 and sell it today you would earn a total of 7.00 from holding Old Westbury Large or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Goldman Sachs Large
Performance |
| Timeline |
| Old Westbury Large |
| Goldman Sachs Large |
Old Westbury and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Goldman Sachs
The main advantage of trading using opposite Old Westbury and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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.| Old Westbury vs. Icon Financial Fund | Old Westbury vs. Vanguard Financials Index | Old Westbury vs. Davis Financial Fund | Old Westbury vs. Transamerica Financial Life |
| 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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