Correlation Between Payden Government and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Payden Government 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 Payden Government and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Government Fund and Goldman Sachs Government, you can compare the effects of market volatilities on Payden Government 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 Payden Government with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Government and Goldman Sachs.
Diversification Opportunities for Payden Government and Goldman Sachs
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Payden and Goldman is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund and Goldman Sachs Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Government and Payden Government 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 Payden Government 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 Government has no effect on the direction of Payden Government i.e., Payden Government and Goldman Sachs go up and down completely randomly.
Pair Corralation between Payden Government and Goldman Sachs
Assuming the 90 days horizon Payden Government is expected to generate 2.61 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Payden Government Fund is 2.13 times less risky than Goldman Sachs. It trades about 0.23 of its potential returns per unit of risk. Goldman Sachs Government is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,283 in Goldman Sachs Government on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Goldman Sachs Government or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Government Fund vs. Goldman Sachs Government
Performance |
| Timeline |
| Payden Government |
| Goldman Sachs Government |
Payden Government and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Government and Goldman Sachs
The main advantage of trading using opposite Payden Government and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government 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.| Payden Government vs. Payden Porate Bond | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Absolute Return | Payden Government vs. Payden Emerging Markets |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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