Correlation Between Western Union and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Union 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 Union Co and Goldman Sachs Group, you can compare the effects of market volatilities on Western Union 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 Union with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Goldman Sachs.
Diversification Opportunities for Western Union and Goldman Sachs
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Goldman is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and Western Union 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 Union Co 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 Group has no effect on the direction of Western Union i.e., Western Union and Goldman Sachs go up and down completely randomly.
Pair Corralation between Western Union and Goldman Sachs
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Goldman Sachs. But the stock apears to be less risky and, when comparing its historical volatility, Western Union Co is 2.14 times less risky than Goldman Sachs. The stock trades about -0.19 of its potential returns per unit of risk. The Goldman Sachs Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 57,262 in Goldman Sachs Group on November 1, 2024 and sell it today you would earn a total of 6,476 from holding Goldman Sachs Group or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Union Co vs. Goldman Sachs Group
Performance |
| Timeline |
| Western Union |
| Goldman Sachs Group |
Western Union and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Goldman Sachs
The main advantage of trading using opposite Western Union and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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 Union vs. American Express | Western Union vs. Upstart Holdings | Western Union vs. Capital One Financial | Western Union vs. Visa Class A |
| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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