Correlation Between All Asset and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both All Asset 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 All Asset and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All Asset Fund and Goldman Sachs Growth, you can compare the effects of market volatilities on All Asset 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 All Asset with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Asset and Goldman Sachs.
Diversification Opportunities for All Asset and Goldman Sachs
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between All and Goldman is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund and Goldman Sachs Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Growth and All Asset 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 All Asset Fund 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 Growth has no effect on the direction of All Asset i.e., All Asset and Goldman Sachs go up and down completely randomly.
Pair Corralation between All Asset and Goldman Sachs
Assuming the 90 days horizon All Asset is expected to generate 3.26 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, All Asset Fund is 1.28 times less risky than Goldman Sachs. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,599 in Goldman Sachs Growth on September 2, 2024 and sell it today you would earn a total of 48.00 from holding Goldman Sachs Growth or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
All Asset Fund vs. Goldman Sachs Growth
Performance |
| Timeline |
| All Asset Fund |
| Goldman Sachs Growth |
All Asset and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All Asset and Goldman Sachs
The main advantage of trading using opposite All Asset and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Asset 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.| All Asset vs. Aam Select Income | All Asset vs. Leggmason Partners Institutional | All Asset vs. Arrow Managed Futures | All Asset vs. Western Asset Municipal |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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