Correlation Between SP 500 and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 VIX and Goldman Sachs Access, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Goldman Sachs.
Diversification Opportunities for SP 500 and Goldman Sachs
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VILX and Goldman is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and Goldman Sachs Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Access and SP 500 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 SP 500 VIX 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 Access has no effect on the direction of SP 500 i.e., SP 500 and Goldman Sachs go up and down completely randomly.
Pair Corralation between SP 500 and Goldman Sachs
Assuming the 90 days trading horizon SP 500 VIX is expected to under-perform the Goldman Sachs. In addition to that, SP 500 is 33.01 times more volatile than Goldman Sachs Access. It trades about -0.09 of its total potential returns per unit of risk. Goldman Sachs Access is currently generating about 0.17 per unit of volatility. If you would invest 5,318 in Goldman Sachs Access on September 13, 2024 and sell it today you would earn a total of 39.00 from holding Goldman Sachs Access or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP 500 VIX vs. Goldman Sachs Access
Performance |
| Timeline |
| SP 500 VIX |
| Goldman Sachs Access |
SP 500 and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP 500 and Goldman Sachs
The main advantage of trading using opposite SP 500 and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.| SP 500 vs. WisdomTree Natural Gas | SP 500 vs. WisdomTree Natural Gas | SP 500 vs. Leverage Shares 2x | SP 500 vs. WisdomTree Silver 3x |
| Goldman Sachs vs. Goldman Sachs Access | 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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