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 Technology, 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
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Goldman is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology 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 Technology 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 High is expected to generate 0.08 times more return on investment than Goldman Sachs. However, Western Asset High is 12.89 times less risky than Goldman Sachs. It trades about -0.05 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about -0.01 per unit of risk. If you would invest 705.00 in Western Asset High on September 20, 2024 and sell it today you would lose (1.00) from holding Western Asset High or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Goldman Sachs Technology
Performance |
| Timeline |
| Western Asset High |
| Goldman Sachs Technology |
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. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
| Goldman Sachs vs. Siit High Yield | Goldman Sachs vs. Nuveen Municipal High | Goldman Sachs vs. Alliancebernstein Global High | Goldman Sachs vs. Western Asset High |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |