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 Diversified and Goldman Sachs Global, 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
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Goldman is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global 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 Diversified 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 Global 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 3.42 times less return on investment than Goldman Sachs. In addition to that, Western Asset is 1.29 times more volatile than Goldman Sachs Global. It trades about 0.05 of its total potential returns per unit of risk. Goldman Sachs Global is currently generating about 0.24 per unit of volatility. If you would invest 1,142 in Goldman Sachs Global on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Goldman Sachs Global or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Goldman Sachs Global
Performance |
| Timeline |
| Western Asset Diversified |
| Goldman Sachs Global |
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. Davis Financial Fund | Western Asset vs. Prudential Jennison Financial | Western Asset vs. Mesirow Financial Small | Western Asset vs. Fidelity Advisor Financial |
| Goldman Sachs vs. Dfa Five Year Global | Goldman Sachs vs. HUMANA INC | Goldman Sachs vs. Aquagold International | Goldman Sachs vs. Barloworld Ltd ADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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