Correlation Between Goldman Sachs and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and NYSE Composite 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 NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Growth and NYSE Composite, you can compare the effects of market volatilities on Goldman Sachs and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and NYSE Composite.
Diversification Opportunities for Goldman Sachs and NYSE Composite
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goldman and NYSE is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Growth and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 Growth are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and NYSE Composite go up and down completely randomly.
Pair Corralation between Goldman Sachs and NYSE Composite
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.07 times less return on investment than NYSE Composite. But when comparing it to its historical volatility, Goldman Sachs Growth is 1.07 times less risky than NYSE Composite. It trades about 0.05 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,459,523 in NYSE Composite on March 6, 2024 and sell it today you would earn a total of 341,173 from holding NYSE Composite or generate 23.38% 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 Growth vs. NYSE Composite
Performance |
| Timeline |
Goldman Sachs and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |