Correlation Between Goldman Sachs and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Pimco Emerging 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 Pimco Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Local and Pimco Emerging Local, you can compare the effects of market volatilities on Goldman Sachs and Pimco Emerging 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 Pimco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Pimco Emerging.
Diversification Opportunities for Goldman Sachs and Pimco Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Pimco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Local and Pimco Emerging Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Local 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 Local are associated (or correlated) with Pimco Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Local has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Pimco Emerging go up and down completely randomly.
Pair Corralation between Goldman Sachs and Pimco Emerging
Assuming the 90 days horizon Goldman Sachs Local is expected to generate 0.37 times more return on investment than Pimco Emerging. However, Goldman Sachs Local is 2.7 times less risky than Pimco Emerging. It trades about -0.29 of its potential returns per unit of risk. Pimco Emerging Local is currently generating about -0.25 per unit of risk. If you would invest 398.00 in Goldman Sachs Local on January 24, 2024 and sell it today you would lose (4.00) from holding Goldman Sachs Local or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Local vs. Pimco Emerging Local
Performance |
| Timeline |
| Goldman Sachs Local |
| Pimco Emerging Local |
Goldman Sachs and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Pimco Emerging
The main advantage of trading using opposite Goldman Sachs and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Pimco Emerging 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 Pimco Emerging will offset losses from the drop in Pimco Emerging's long position.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
| Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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