Correlation Between Balanced Fund and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Goldman Sachs Mid, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Goldman Sachs.
Diversification Opportunities for Balanced Fund and Goldman Sachs
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Goldman is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Goldman Sachs Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Mid and Balanced Fund 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 Balanced Fund Investor 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 Mid has no effect on the direction of Balanced Fund i.e., Balanced Fund and Goldman Sachs go up and down completely randomly.
Pair Corralation between Balanced Fund and Goldman Sachs
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.6 times more return on investment than Goldman Sachs. However, Balanced Fund Investor is 1.68 times less risky than Goldman Sachs. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Mid is currently generating about 0.05 per unit of risk. If you would invest 1,582 in Balanced Fund Investor on September 3, 2024 and sell it today you would earn a total of 446.00 from holding Balanced Fund Investor or generate 28.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Goldman Sachs Mid
Performance |
| Timeline |
| Balanced Fund Investor |
| Goldman Sachs Mid |
Balanced Fund and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Goldman Sachs
The main advantage of trading using opposite Balanced Fund and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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