Correlation Between Capital Income and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Capital Income and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Goldman Sachs Growth, you can compare the effects of market volatilities on Capital Income 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 Capital Income with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Goldman Sachs.
Diversification Opportunities for Capital Income and Goldman Sachs
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Goldman is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder 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 Capital Income 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 Capital Income Builder 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 Capital Income i.e., Capital Income and Goldman Sachs go up and down completely randomly.
Pair Corralation between Capital Income and Goldman Sachs
Assuming the 90 days horizon Capital Income is expected to generate 1.18 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Capital Income Builder is 1.29 times less risky than Goldman Sachs. It trades about 0.12 of its potential returns per unit of risk. Goldman Sachs Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,683 in Goldman Sachs Growth on August 29, 2024 and sell it today you would earn a total of 398.00 from holding Goldman Sachs Growth or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Goldman Sachs Growth
Performance |
| Timeline |
| Capital Income Builder |
| Goldman Sachs Growth |
Capital Income and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Goldman Sachs
The main advantage of trading using opposite Capital Income and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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.| Capital Income vs. Transamerica Intermediate Muni | Capital Income vs. California High Yield Municipal | Capital Income vs. Counterpoint Tactical Municipal | Capital Income vs. Ab Impact Municipal |
| Goldman Sachs vs. Capital Income Builder | Goldman Sachs vs. Capital Income Builder | Goldman Sachs vs. Capital Income Builder | Goldman Sachs vs. HUMANA INC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |