Correlation Between Amana Developing and Goldman Sachs

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Can any of the company-specific risk be diversified away by investing in both Amana Developing 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 Amana Developing and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amana Developing World and Goldman Sachs Emerging, you can compare the effects of market volatilities on Amana Developing 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 Amana Developing with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amana Developing and Goldman Sachs.

Diversification Opportunities for Amana Developing and Goldman Sachs

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Amana and Goldman is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding AMANA DEVELOPING WORLD and GOLDMAN SACHS EMERGING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Emerging and Amana Developing 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 Amana Developing World 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 Emerging has no effect on the direction of Amana Developing i.e., Amana Developing and Goldman Sachs go up and down completely randomly.

Pair Corralation between Amana Developing and Goldman Sachs

Assuming the 90 days horizon Amana Developing World is expected to generate 1.18 times more return on investment than Goldman Sachs. However, Amana Developing is 1.18 times more volatile than Goldman Sachs Emerging. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs Emerging is currently generating about 0.1 per unit of risk. If you would invest  1,275  in Amana Developing World on December 29, 2023 and sell it today you would earn a total of  36.00  from holding Amana Developing World or generate 2.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

AMANA DEVELOPING WORLD  vs.  GOLDMAN SACHS EMERGING

 Performance 
       Timeline  
Amana Developing World 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Amana Developing World are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amana Developing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Goldman Sachs Emerging 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Emerging are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amana Developing and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amana Developing and Goldman Sachs

The main advantage of trading using opposite Amana Developing and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amana Developing 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.
The idea behind Amana Developing World and Goldman Sachs Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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