Correlation Between SCE Trust and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both SCE Trust 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 SCE Trust and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCE Trust IV and The Goldman Sachs, you can compare the effects of market volatilities on SCE Trust 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 SCE Trust with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCE Trust and Goldman Sachs.
Diversification Opportunities for SCE Trust and Goldman Sachs
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCE and Goldman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SCE Trust IV and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and SCE Trust 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 SCE Trust IV 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 has no effect on the direction of SCE Trust i.e., SCE Trust and Goldman Sachs go up and down completely randomly.
Pair Corralation between SCE Trust and Goldman Sachs
Assuming the 90 days trading horizon SCE Trust IV is expected to generate about the same return on investment as The Goldman Sachs. But, SCE Trust IV is 1.69 times less risky than Goldman Sachs. It trades about 0.02 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.01 per unit of risk. If you would invest 2,440 in The Goldman Sachs on August 28, 2024 and sell it today you would earn a total of 3.00 from holding The Goldman Sachs or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCE Trust IV vs. The Goldman Sachs
Performance |
| Timeline |
| SCE Trust IV |
| Goldman Sachs |
SCE Trust and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCE Trust and Goldman Sachs
The main advantage of trading using opposite SCE Trust and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCE Trust 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.| SCE Trust vs. Dominion Energy | SCE Trust vs. Consolidated Edison | SCE Trust vs. Eversource Energy | SCE Trust vs. FirstEnergy |
| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. The Goldman Sachs | Goldman Sachs vs. SCE Trust IV |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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