Correlation Between Vanguard Small and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Vanguard Small 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 Vanguard Small and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Goldman Sachs ActiveBeta, you can compare the effects of market volatilities on Vanguard Small 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 Vanguard Small with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Goldman Sachs.
Diversification Opportunities for Vanguard Small and Goldman Sachs
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Goldman is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Goldman Sachs ActiveBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ActiveBeta and Vanguard Small 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 Vanguard Small Cap Value 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 ActiveBeta has no effect on the direction of Vanguard Small i.e., Vanguard Small and Goldman Sachs go up and down completely randomly.
Pair Corralation between Vanguard Small and Goldman Sachs
Considering the 90-day investment horizon Vanguard Small Cap Value is expected to under-perform the Goldman Sachs. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Small Cap Value is 1.26 times less risky than Goldman Sachs. The etf trades about -0.26 of its potential returns per unit of risk. The Goldman Sachs ActiveBeta is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 7,096 in Goldman Sachs ActiveBeta on November 27, 2024 and sell it today you would lose (268.00) from holding Goldman Sachs ActiveBeta or give up 3.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Goldman Sachs ActiveBeta
Performance |
| Timeline |
| Vanguard Small Cap |
| Goldman Sachs ActiveBeta |
Vanguard Small and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Goldman Sachs
The main advantage of trading using opposite Vanguard Small and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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.| Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Small Cap Growth | Vanguard Small vs. Vanguard Value Index | Vanguard Small vs. Vanguard Small Cap Index |
| Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs Access |
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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