Correlation Between Vanguard Extended and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended 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 Extended 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 Extended Market and Goldman Sachs Mid, you can compare the effects of market volatilities on Vanguard Extended 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 Extended with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Goldman Sachs.
Diversification Opportunities for Vanguard Extended and Goldman Sachs
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market 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 Vanguard Extended 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 Extended Market 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 Vanguard Extended i.e., Vanguard Extended and Goldman Sachs go up and down completely randomly.
Pair Corralation between Vanguard Extended and Goldman Sachs
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.44 times more return on investment than Goldman Sachs. However, Vanguard Extended is 1.44 times more volatile than Goldman Sachs Mid. It trades about 0.36 of its potential returns per unit of risk. Goldman Sachs Mid is currently generating about 0.28 per unit of risk. If you would invest 14,083 in Vanguard Extended Market on August 28, 2024 and sell it today you would earn a total of 1,540 from holding Vanguard Extended Market or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Goldman Sachs Mid
Performance |
| Timeline |
| Vanguard Extended Market |
| Goldman Sachs Mid |
Vanguard Extended and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Goldman Sachs
The main advantage of trading using opposite Vanguard Extended and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended 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 Extended vs. Vanguard Total International | Vanguard Extended vs. Vanguard Total Bond | Vanguard Extended vs. Vanguard Value Index | Vanguard Extended vs. Vanguard Growth Index |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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