Correlation Between Goldman Sachs and Target
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Target 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 Target 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 Target, you can compare the effects of market volatilities on Goldman Sachs and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Target.
Diversification Opportunities for Goldman Sachs and Target
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goldman and Target is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Target go up and down completely randomly.
Pair Corralation between Goldman Sachs and Target
Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 1.5 times less return on investment than Target. But when comparing it to its historical volatility, Goldman Sachs Group is 1.68 times less risky than Target. It trades about 0.19 of its potential returns per unit of risk. Target is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 10,554 in Target on January 19, 2024 and sell it today you would earn a total of 6,104 from holding Target or generate 57.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Target
Performance |
| Timeline |
| Goldman Sachs Group |
| Target |
Goldman Sachs and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Target
The main advantage of trading using opposite Goldman Sachs and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Goldman Sachs vs. Riot Blockchain | Goldman Sachs vs. Marathon Digital Holdings | Goldman Sachs vs. Hut 8 Corp | Goldman Sachs vs. CleanSpark |
| Target vs. Betterware De Mexico | Target vs. Amexdrug | Target vs. Provident Bancorp | Target vs. Mersana Therapeutics |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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