Correlation Between Western Asset and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Goldman Sachs High, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Goldman Sachs.
Diversification Opportunities for Western Asset and Goldman Sachs
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and GOLDMAN is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Goldman Sachs High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs High and Western Asset 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 Western Asset High 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 High has no effect on the direction of Western Asset i.e., Western Asset and Goldman Sachs go up and down completely randomly.
Pair Corralation between Western Asset and Goldman Sachs
Assuming the 90 days horizon Western Asset is expected to generate 1.4 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Western Asset High is 2.18 times less risky than Goldman Sachs. It trades about 0.22 of its potential returns per unit of risk. Goldman Sachs High is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 924.00 in Goldman Sachs High on August 25, 2024 and sell it today you would earn a total of 11.00 from holding Goldman Sachs High or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Goldman Sachs High
Performance |
| Timeline |
| Western Asset High |
| Goldman Sachs High |
Western Asset and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Goldman Sachs
The main advantage of trading using opposite Western Asset and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Legg Mason Bw | Western Asset vs. Alternative Asset Allocation | Western Asset vs. Enhanced Large Pany | Western Asset vs. Falcon Focus Scv |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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