Correlation Between Vanguard and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 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 SP Small Cap and Goldman Sachs ActiveBeta, you can compare the effects of market volatilities on Vanguard 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 with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Goldman Sachs.
Diversification Opportunities for Vanguard and Goldman Sachs
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Goldman is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Small Cap 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 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 SP Small Cap 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 i.e., Vanguard and Goldman Sachs go up and down completely randomly.
Pair Corralation between Vanguard and Goldman Sachs
Given the investment horizon of 90 days Vanguard is expected to generate 1.08 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Vanguard SP Small Cap is 1.05 times less risky than Goldman Sachs. It trades about 0.08 of its potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,143 in Goldman Sachs ActiveBeta on August 29, 2024 and sell it today you would earn a total of 1,428 from holding Goldman Sachs ActiveBeta or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP Small Cap vs. Goldman Sachs ActiveBeta
Performance |
| Timeline |
| Vanguard SP Small |
| Goldman Sachs ActiveBeta |
Vanguard and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Goldman Sachs
The main advantage of trading using opposite Vanguard and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard Russell 2000 |
| Goldman Sachs vs. Vanguard Mid Cap Index | Goldman Sachs vs. Vanguard Small Cap Value | Goldman Sachs vs. Vanguard FTSE Emerging | Goldman Sachs vs. Vanguard Large Cap Index |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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