Correlation Between California Bond and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both California Bond 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 California Bond and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Goldman Sachs International, you can compare the effects of market volatilities on California Bond 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 California Bond with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Goldman Sachs.
Diversification Opportunities for California Bond and Goldman Sachs
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between California and Goldman is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern and California Bond 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 California Bond Fund 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 Intern has no effect on the direction of California Bond i.e., California Bond and Goldman Sachs go up and down completely randomly.
Pair Corralation between California Bond and Goldman Sachs
Assuming the 90 days horizon California Bond is expected to generate 2.96 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, California Bond Fund is 3.31 times less risky than Goldman Sachs. It trades about 0.07 of its potential returns per unit of risk. Goldman Sachs International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,049 in Goldman Sachs International on September 5, 2024 and sell it today you would earn a total of 275.00 from holding Goldman Sachs International or generate 26.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Goldman Sachs International
Performance |
| Timeline |
| California Bond |
| Goldman Sachs Intern |
California Bond and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Goldman Sachs
The main advantage of trading using opposite California Bond and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond 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.| California Bond vs. Maryland Short Term Tax Free | California Bond vs. Siit Ultra Short | California Bond vs. Calvert Short Duration | California Bond vs. Rbc Short Duration |
| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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