Correlation Between Smallcap Growth and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth 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 Smallcap Growth and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Goldman Sachs Clean, you can compare the effects of market volatilities on Smallcap Growth 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 Smallcap Growth with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Goldman Sachs.
Diversification Opportunities for Smallcap Growth and Goldman Sachs
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Smallcap and Goldman is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Smallcap Growth 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 Smallcap Growth 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 Clean has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Goldman Sachs go up and down completely randomly.
Pair Corralation between Smallcap Growth and Goldman Sachs
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 0.99 times more return on investment than Goldman Sachs. However, Smallcap Growth Fund is 1.01 times less risky than Goldman Sachs. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.04 per unit of risk. If you would invest 1,195 in Smallcap Growth Fund on September 14, 2024 and sell it today you would earn a total of 491.00 from holding Smallcap Growth Fund or generate 41.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Goldman Sachs Clean
Performance |
| Timeline |
| Smallcap Growth |
| Goldman Sachs Clean |
Smallcap Growth and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Goldman Sachs
The main advantage of trading using opposite Smallcap Growth and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth 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.| Smallcap Growth vs. Eip Growth And | Smallcap Growth vs. Franklin Growth Opportunities | Smallcap Growth vs. Rational Defensive Growth | Smallcap Growth vs. Praxis Growth Index |
| Goldman Sachs vs. Rational Defensive Growth | Goldman Sachs vs. Franklin Growth Opportunities | Goldman Sachs vs. Ftfa Franklin Templeton Growth | Goldman Sachs vs. Smallcap Growth Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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