Correlation Between Sp Midcap and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Sp Midcap 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 Sp Midcap and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Midcap Index and Goldman Sachs Local, you can compare the effects of market volatilities on Sp Midcap 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 Sp Midcap with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Goldman Sachs.
Diversification Opportunities for Sp Midcap and Goldman Sachs
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPMIX and Goldman is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Goldman Sachs Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Local and Sp Midcap 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 Sp Midcap Index 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 Local has no effect on the direction of Sp Midcap i.e., Sp Midcap and Goldman Sachs go up and down completely randomly.
Pair Corralation between Sp Midcap and Goldman Sachs
Assuming the 90 days horizon Sp Midcap Index is expected to generate 5.41 times more return on investment than Goldman Sachs. However, Sp Midcap is 5.41 times more volatile than Goldman Sachs Local. It trades about 0.03 of its potential returns per unit of risk. Goldman Sachs Local is currently generating about 0.13 per unit of risk. If you would invest 2,443 in Sp Midcap Index on November 3, 2024 and sell it today you would earn a total of 200.00 from holding Sp Midcap Index or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp Midcap Index vs. Goldman Sachs Local
Performance |
| Timeline |
| Sp Midcap Index |
| Goldman Sachs Local |
Sp Midcap and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Midcap and Goldman Sachs
The main advantage of trading using opposite Sp Midcap and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Midcap 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.| Sp Midcap vs. Tfa Alphagen Growth | Sp Midcap vs. Barings Active Short | Sp Midcap vs. Ab Small Cap | Sp Midcap vs. Glg Intl Small |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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