Correlation Between Goldman Sachs and New Economy
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Goldman Sachs and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and New Economy.
Diversification Opportunities for Goldman Sachs and New Economy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Goldman and New is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Centrated and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and New Economy go up and down completely randomly.
Pair Corralation between Goldman Sachs and New Economy
Assuming the 90 days horizon Goldman Sachs Centrated is expected to under-perform the New Economy. In addition to that, Goldman Sachs is 7.05 times more volatile than New Economy Fund. It trades about -0.16 of its total potential returns per unit of risk. New Economy Fund is currently generating about -0.02 per unit of volatility. If you would invest 5,571 in New Economy Fund on January 25, 2024 and sell it today you would lose (48.00) from holding New Economy Fund or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Centrated vs. New Economy Fund
Performance |
| Timeline |
| Goldman Sachs Centrated |
| New Economy Fund |
Goldman Sachs and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and New Economy
The main advantage of trading using opposite Goldman Sachs and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Goldman Sachs vs. Amana Income Fund | Goldman Sachs vs. Amana Income Fund | Goldman Sachs vs. Amana Developing World | Goldman Sachs vs. Amana Developing World |
| New Economy vs. Marsico 21st Century | New Economy vs. Northern Small Cap | New Economy vs. Aberdeen Select International | New Economy vs. HUMANA INC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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