Correlation Between Commodities Strategy and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy 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 Commodities Strategy and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Goldman Sachs Income, you can compare the effects of market volatilities on Commodities Strategy 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 Commodities Strategy with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Goldman Sachs.
Diversification Opportunities for Commodities Strategy and Goldman Sachs
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commodities and Goldman is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Goldman Sachs Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Income and Commodities Strategy 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 Commodities Strategy 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 Income has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Goldman Sachs go up and down completely randomly.
Pair Corralation between Commodities Strategy and Goldman Sachs
Assuming the 90 days horizon Commodities Strategy is expected to generate 1.68 times less return on investment than Goldman Sachs. In addition to that, Commodities Strategy is 2.93 times more volatile than Goldman Sachs Income. It trades about 0.03 of its total potential returns per unit of risk. Goldman Sachs Income is currently generating about 0.16 per unit of volatility. If you would invest 2,230 in Goldman Sachs Income on September 4, 2024 and sell it today you would earn a total of 329.00 from holding Goldman Sachs Income or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Goldman Sachs Income
Performance |
| Timeline |
| Commodities Strategy |
| Goldman Sachs Income |
Commodities Strategy and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Goldman Sachs
The main advantage of trading using opposite Commodities Strategy and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy 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.| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Energy Fund Investor | Commodities Strategy vs. Real Estate Fund |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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