Correlation Between Sprott Gold and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Sprott Gold 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 Sprott Gold and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Gold Equity and Goldman Sachs Clean, you can compare the effects of market volatilities on Sprott Gold 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 Sprott Gold with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and Goldman Sachs.
Diversification Opportunities for Sprott Gold and Goldman Sachs
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sprott and Goldman is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Sprott Gold 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 Sprott Gold Equity 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 Clean has no effect on the direction of Sprott Gold i.e., Sprott Gold and Goldman Sachs go up and down completely randomly.
Pair Corralation between Sprott Gold and Goldman Sachs
Assuming the 90 days horizon Sprott Gold Equity is expected to generate 1.25 times more return on investment than Goldman Sachs. However, Sprott Gold is 1.25 times more volatile than Goldman Sachs Clean. It trades about -0.14 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.22 per unit of risk. If you would invest 5,987 in Sprott Gold Equity on August 28, 2024 and sell it today you would lose (341.00) from holding Sprott Gold Equity or give up 5.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Gold Equity vs. Goldman Sachs Clean
Performance |
| Timeline |
| Sprott Gold Equity |
| Goldman Sachs Clean |
Sprott Gold and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Gold and Goldman Sachs
The main advantage of trading using opposite Sprott Gold and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold 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.| Sprott Gold vs. Sprott Junior Gold | Sprott Gold vs. Sprott Gold Miners | Sprott Gold vs. Europac Gold Fund | Sprott Gold vs. US Global GO |
| Goldman Sachs vs. Columbia Vertible Securities | Goldman Sachs vs. Lord Abbett Vertible | Goldman Sachs vs. Harbor Vertible Securities | Goldman Sachs vs. Absolute Convertible Arbitrage |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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