Correlation Between GM and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Goldman Sachs Centrated, you can compare the effects of market volatilities on GM 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 GM with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Goldman Sachs.
Diversification Opportunities for GM and Goldman Sachs
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Goldman is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Goldman Sachs go up and down completely randomly.
Pair Corralation between GM and Goldman Sachs
Allowing for the 90-day total investment horizon GM is expected to generate 20.67 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, General Motors is 13.5 times less risky than Goldman Sachs. It trades about 0.05 of its potential returns per unit of risk. 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 Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
General Motors vs. Goldman Sachs Centrated
Performance |
Timeline |
General Motors |
Goldman Sachs Centrated |
GM and Goldman Sachs Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Goldman Sachs
The main advantage of trading using opposite GM and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.Goldman Sachs vs. American Funds The | Goldman Sachs vs. American Funds The | Goldman Sachs vs. Growth Fund Of | Goldman Sachs vs. Growth Fund Of |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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