Correlation Between Goldman Sachs and Bank of New York
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Bank of New York 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 Bank of New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and Bank of New, you can compare the effects of market volatilities on Goldman Sachs and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Bank of New York.
Diversification Opportunities for Goldman Sachs and Bank of New York
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Bank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Group are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Bank of New York go up and down completely randomly.
Pair Corralation between Goldman Sachs and Bank of New York
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.31 times more return on investment than Bank of New York. However, Goldman Sachs is 1.31 times more volatile than Bank of New. It trades about 0.14 of its potential returns per unit of risk. Bank of New is currently generating about 0.1 per unit of risk. If you would invest 40,494 in Goldman Sachs Group on January 25, 2024 and sell it today you would earn a total of 1,810 from holding Goldman Sachs Group or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Bank of New
Performance |
| Timeline |
| Goldman Sachs Group |
| Bank of New York |
Goldman Sachs and Bank of New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Bank of New York
The main advantage of trading using opposite Goldman Sachs and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
| Bank of New York vs. Federated Premier Municipal | Bank of New York vs. Blackrock Muniyield | Bank of New York vs. Diamond Hill Investment | Bank of New York vs. NXG NextGen Infrastructure |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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