Correlation Between VHAI and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both VHAI 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 VHAI and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VHAI and Goldman Sachs Clean, you can compare the effects of market volatilities on VHAI 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 VHAI with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of VHAI and Goldman Sachs.
Diversification Opportunities for VHAI and Goldman Sachs
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VHAI and Goldman is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and VHAI 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 VHAI 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 Clean has no effect on the direction of VHAI i.e., VHAI and Goldman Sachs go up and down completely randomly.
Pair Corralation between VHAI and Goldman Sachs
Given the investment horizon of 90 days VHAI is expected to under-perform the Goldman Sachs. In addition to that, VHAI is 11.48 times more volatile than Goldman Sachs Clean. It trades about -0.11 of its total potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.05 per unit of volatility. If you would invest 959.00 in Goldman Sachs Clean on September 3, 2024 and sell it today you would lose (69.00) from holding Goldman Sachs Clean or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
VHAI vs. Goldman Sachs Clean
Performance |
| Timeline |
| VHAI |
| Goldman Sachs Clean |
VHAI and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VHAI and Goldman Sachs
The main advantage of trading using opposite VHAI and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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 VHAI and Goldman Sachs Clean 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.| Goldman Sachs vs. Kinetics Internet Fund | Goldman Sachs vs. Kinetics Internet Fund | Goldman Sachs vs. Kinetics Internet Fund | 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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