Correlation Between Snap and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Goldman Sachs Large, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Goldman Sachs.
Diversification Opportunities for Snap and Goldman Sachs
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Snap and Goldman is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large and Snap 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 Snap Inc 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 Large has no effect on the direction of Snap i.e., Snap and Goldman Sachs go up and down completely randomly.
Pair Corralation between Snap and Goldman Sachs
Given the investment horizon of 90 days Snap Inc is expected to under-perform the Goldman Sachs. In addition to that, Snap is 3.36 times more volatile than Goldman Sachs Large. It trades about -0.08 of its total potential returns per unit of risk. Goldman Sachs Large is currently generating about 0.29 per unit of volatility. If you would invest 2,632 in Goldman Sachs Large on August 31, 2024 and sell it today you would earn a total of 154.00 from holding Goldman Sachs Large or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Snap Inc vs. Goldman Sachs Large
Performance |
| Timeline |
| Snap Inc |
| Goldman Sachs Large |
Snap and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Goldman Sachs
The main advantage of trading using opposite Snap and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and Goldman Sachs Large pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Goldman Sachs vs. Artisan High Income | Goldman Sachs vs. Ft 7934 Corporate | Goldman Sachs vs. Maryland Tax Free Bond | Goldman Sachs vs. Rationalpier 88 Convertible |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Transaction History View history of all your transactions and understand their impact on performance |