Correlation Between Goldman Sachs and International Business
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Goldman Sachs and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and International Business.
Diversification Opportunities for Goldman Sachs and International Business
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and International is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CENTRATED and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and International Business go up and down completely randomly.
Pair Corralation between Goldman Sachs and International Business
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.79 times less return on investment than International Business. In addition to that, Goldman Sachs is 1.11 times more volatile than International Business Machines. It trades about 0.04 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.08 per unit of volatility. If you would invest 11,504 in International Business Machines on December 30, 2023 and sell it today you would earn a total of 7,592 from holding International Business Machines or generate 65.99% 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. International Business Machine
Performance |
Timeline |
Goldman Sachs Centrated |
International Business |
Goldman Sachs and International Business Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Goldman Sachs and International Business
The main advantage of trading using opposite Goldman Sachs and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.Goldman Sachs vs. American Funds | Goldman Sachs vs. American Funds | Goldman Sachs vs. Growth Fund Of | Goldman Sachs vs. Growth Fund Of |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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