Correlation Between State Street and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Income and Goldman Sachs Technology, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Goldman Sachs.
Diversification Opportunities for State Street and Goldman Sachs
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Goldman is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding State Street Income and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and State Street 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 State Street Income 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 Technology has no effect on the direction of State Street i.e., State Street and Goldman Sachs go up and down completely randomly.
Pair Corralation between State Street and Goldman Sachs
Assuming the 90 days horizon State Street is expected to generate 4.91 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, State Street Income is 4.24 times less risky than Goldman Sachs. It trades about 0.14 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,548 in Goldman Sachs Technology on November 8, 2024 and sell it today you would earn a total of 161.00 from holding Goldman Sachs Technology or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Income vs. Goldman Sachs Technology
Performance |
| Timeline |
| State Street Income |
| Goldman Sachs Technology |
State Street and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Goldman Sachs
The main advantage of trading using opposite State Street and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Artisan Developing World | State Street vs. Ashmore Emerging Markets | State Street vs. Calvert Developed Market | State Street vs. Locorr Market Trend |
| Goldman Sachs vs. Amg River Road | Goldman Sachs vs. Small Cap Value | Goldman Sachs vs. Fpa Queens Road | Goldman Sachs vs. Great West Loomis Sayles |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |