Correlation Between Transamerica Intermediate and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Transamerica Intermediate 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 Intermediate 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 Intermediate Muni and Goldman Sachs Capital, you can compare the effects of market volatilities on Transamerica Intermediate 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 Intermediate with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Intermediate and Goldman Sachs.
Diversification Opportunities for Transamerica Intermediate and Goldman Sachs
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Goldman is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Intermediate Muni and Goldman Sachs Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Capital and Transamerica Intermediate 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 Intermediate Muni 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 Capital has no effect on the direction of Transamerica Intermediate i.e., Transamerica Intermediate and Goldman Sachs go up and down completely randomly.
Pair Corralation between Transamerica Intermediate and Goldman Sachs
Assuming the 90 days horizon Transamerica Intermediate Muni is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Transamerica Intermediate Muni is 3.5 times less risky than Goldman Sachs. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Goldman Sachs Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,360 in Goldman Sachs Capital on November 4, 2024 and sell it today you would earn a total of 29.00 from holding Goldman Sachs Capital or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Intermediate Muni vs. Goldman Sachs Capital
Performance |
| Timeline |
| Transamerica Intermediate |
| Goldman Sachs Capital |
Transamerica Intermediate and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Intermediate and Goldman Sachs
The main advantage of trading using opposite Transamerica Intermediate and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Intermediate 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 Intermediate vs. The Hartford High | Transamerica Intermediate vs. Ab High Income | Transamerica Intermediate vs. Needham Aggressive Growth | Transamerica Intermediate vs. Calamos High Income |
| Goldman Sachs vs. The Hartford Growth | Goldman Sachs vs. Growth Allocation Fund | Goldman Sachs vs. Rational Defensive Growth | Goldman Sachs vs. Praxis Genesis Growth |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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