Correlation Between Goldman Sachs and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Amcap Fund 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 Goldman Sachs and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Centrated and Amcap Fund Class, you can compare the effects of market volatilities on Goldman Sachs and Amcap Fund 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 Goldman Sachs with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Amcap Fund.
Diversification Opportunities for Goldman Sachs and Amcap Fund
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and Amcap is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Centrated and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class and Goldman Sachs 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 Goldman Sachs Centrated are associated (or correlated) with Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Amcap Fund go up and down completely randomly.
Pair Corralation between Goldman Sachs and Amcap Fund
Assuming the 90 days horizon Goldman Sachs Centrated is expected to generate 1.14 times more return on investment than Amcap Fund. However, Goldman Sachs is 1.14 times more volatile than Amcap Fund Class. It trades about 0.11 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.12 per unit of risk. If you would invest 1,658 in Goldman Sachs Centrated on January 19, 2024 and sell it today you would earn a total of 439.00 from holding Goldman Sachs Centrated or generate 26.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Centrated vs. Amcap Fund Class
Performance |
| Timeline |
| Goldman Sachs Centrated |
| Amcap Fund Class |
Goldman Sachs and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Amcap Fund
The main advantage of trading using opposite Goldman Sachs and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.The idea behind Goldman Sachs Centrated and Amcap Fund Class 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.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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