Correlation Between Amana Developing and Goldman Sachs

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 Centrated, 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

-0.03

Correlation Coefficient

Amana Developing  Goldman Sachs

Good diversification

The 3 months correlation between Amana and Goldman is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Amana Developing World and Goldman Sachs Centrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Centrated 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 Centrated 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 under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Amana Developing World is 21.09 times less risky than Goldman Sachs. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Goldman Sachs Centrated is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  783.00  in Goldman Sachs Centrated on February 5, 2024 and sell it today you would lose (6.00) from holding Goldman Sachs Centrated or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Amana Developing World  vs.  Goldman Sachs Centrated

Amana Developing World

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amana Developing World are ranked lower than 7 (%) 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 Centrated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Centrated are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

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 Centrated 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.