Correlation Between Health Biotchnology and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology 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 Health Biotchnology and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Goldman Sachs Small, you can compare the effects of market volatilities on Health Biotchnology 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 Health Biotchnology with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Goldman Sachs.
Diversification Opportunities for Health Biotchnology and Goldman Sachs
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Health and Goldman is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and Goldman Sachs Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Small and Health Biotchnology 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 Health Biotchnology Portfolio 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 Small has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and Goldman Sachs go up and down completely randomly.
Pair Corralation between Health Biotchnology and Goldman Sachs
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Health Biotchnology Portfolio is 1.64 times less risky than Goldman Sachs. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Goldman Sachs Small is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,973 in Goldman Sachs Small on September 12, 2024 and sell it today you would earn a total of 467.00 from holding Goldman Sachs Small or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Goldman Sachs Small
Performance |
| Timeline |
| Health Biotchnology |
| Goldman Sachs Small |
Health Biotchnology and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Goldman Sachs
The main advantage of trading using opposite Health Biotchnology and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology 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.| Health Biotchnology vs. Alpine Ultra Short | Health Biotchnology vs. Aqr Long Short Equity | Health Biotchnology vs. Boston Partners Longshort | Health Biotchnology vs. Quantitative Longshort Equity |
| Goldman Sachs vs. Health Biotchnology Portfolio | Goldman Sachs vs. Alger Health Sciences | Goldman Sachs vs. Prudential Health Sciences | Goldman Sachs vs. Baron Health Care |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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