Correlation Between Financial Select and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Financial Select 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 Financial Select and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Select Sector and Goldman Sachs ETF, you can compare the effects of market volatilities on Financial Select 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 Financial Select with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Select and Goldman Sachs.
Diversification Opportunities for Financial Select and Goldman Sachs
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Financial and Goldman is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Financial Select Sector and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF and Financial Select 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 Financial Select Sector 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 ETF has no effect on the direction of Financial Select i.e., Financial Select and Goldman Sachs go up and down completely randomly.
Pair Corralation between Financial Select and Goldman Sachs
Considering the 90-day investment horizon Financial Select Sector is expected to generate 3.44 times more return on investment than Goldman Sachs. However, Financial Select is 3.44 times more volatile than Goldman Sachs ETF. It trades about 0.33 of its potential returns per unit of risk. Goldman Sachs ETF is currently generating about 0.13 per unit of risk. If you would invest 4,648 in Financial Select Sector on September 1, 2024 and sell it today you would earn a total of 486.00 from holding Financial Select Sector or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Financial Select Sector vs. Goldman Sachs ETF
Performance |
| Timeline |
| Financial Select Sector |
| Goldman Sachs ETF |
Financial Select and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Select and Goldman Sachs
The main advantage of trading using opposite Financial Select and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Select 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.| Financial Select vs. Vanguard Financials Index | Financial Select vs. SPDR SP Bank | Financial Select vs. Fidelity MSCI Financials | Financial Select vs. iShares Financial Services |
| Goldman Sachs vs. iShares JP Morgan | Goldman Sachs vs. SPDR Bloomberg Barclays | Goldman Sachs vs. SPDR DoubleLine Emerging | Goldman Sachs vs. JPMorgan USD Emerging |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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