Correlation Between Touchstone International and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Touchstone International 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 Touchstone International and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone International Equity and Goldman Sachs Focused, you can compare the effects of market volatilities on Touchstone International 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 Touchstone International with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Goldman Sachs.
Diversification Opportunities for Touchstone International and Goldman Sachs
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Touchstone and Goldman is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Equit and Goldman Sachs Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Focused and Touchstone International 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 Touchstone International Equity 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 Focused has no effect on the direction of Touchstone International i.e., Touchstone International and Goldman Sachs go up and down completely randomly.
Pair Corralation between Touchstone International and Goldman Sachs
Assuming the 90 days horizon Touchstone International Equity is expected to under-perform the Goldman Sachs. In addition to that, Touchstone International is 1.09 times more volatile than Goldman Sachs Focused. It trades about -0.11 of its total potential returns per unit of risk. Goldman Sachs Focused is currently generating about 0.31 per unit of volatility. If you would invest 1,669 in Goldman Sachs Focused on September 2, 2024 and sell it today you would earn a total of 93.00 from holding Goldman Sachs Focused or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Equit vs. Goldman Sachs Focused
Performance |
| Timeline |
| Touchstone International |
| Goldman Sachs Focused |
Touchstone International and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Goldman Sachs
The main advantage of trading using opposite Touchstone International and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International 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 Touchstone International Equity and Goldman Sachs Focused 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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