Correlation Between Transamerica High and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Transamerica High 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 Transamerica High and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica High Yield and Goldman Sachs Government, you can compare the effects of market volatilities on Transamerica High 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 Transamerica High with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica High and Goldman Sachs.
Diversification Opportunities for Transamerica High and Goldman Sachs
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transamerica and Goldman is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica High Yield and Goldman Sachs Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Government and Transamerica High 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 Transamerica High Yield 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 Government has no effect on the direction of Transamerica High i.e., Transamerica High and Goldman Sachs go up and down completely randomly.
Pair Corralation between Transamerica High and Goldman Sachs
Assuming the 90 days horizon Transamerica High Yield is expected to generate 0.65 times more return on investment than Goldman Sachs. However, Transamerica High Yield is 1.54 times less risky than Goldman Sachs. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs Government is currently generating about 0.08 per unit of risk. If you would invest 820.00 in Transamerica High Yield on November 2, 2024 and sell it today you would earn a total of 5.00 from holding Transamerica High Yield or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica High Yield vs. Goldman Sachs Government
Performance |
| Timeline |
| Transamerica High Yield |
| Goldman Sachs Government |
Transamerica High and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica High and Goldman Sachs
The main advantage of trading using opposite Transamerica High and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica High 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.| Transamerica High vs. Needham Small Cap | Transamerica High vs. Kinetics Small Cap | Transamerica High vs. Hunter Small Cap | Transamerica High vs. Sp Smallcap 600 |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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