Correlation Between GOLDMAN SACHS and AMERICAN FUNDS

Can any of the company-specific risk be diversified away by investing in both GOLDMAN SACHS and AMERICAN FUNDS 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 AMERICAN FUNDS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOLDMAN SACHS INFLATION and AMERICAN FUNDS 2010, you can compare the effects of market volatilities on GOLDMAN SACHS and AMERICAN FUNDS 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 AMERICAN FUNDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDMAN SACHS and AMERICAN FUNDS.

Diversification Opportunities for GOLDMAN SACHS and AMERICAN FUNDS

Poor diversification

The 3 months correlation between GOLDMAN and AMERICAN is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS INFLATION and AMERICAN FUNDS 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN FUNDS 2010 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 INFLATION are associated (or correlated) with AMERICAN FUNDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN FUNDS 2010 has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and AMERICAN FUNDS go up and down completely randomly.

Pair Corralation between GOLDMAN SACHS and AMERICAN FUNDS

Assuming the 90 days horizon GOLDMAN SACHS INFLATION is expected to generate 0.72 times more return on investment than AMERICAN FUNDS. However, GOLDMAN SACHS INFLATION is 1.39 times less risky than AMERICAN FUNDS. It trades about -0.1 of its potential returns per unit of risk. AMERICAN FUNDS 2010 is currently generating about -0.15 per unit of risk. If you would invest  954.00  in GOLDMAN SACHS INFLATION on June 27, 2023 and sell it today you would lose (5.00) from holding GOLDMAN SACHS INFLATION or give up 0.52% of portfolio value over 90 days.

GOLDMAN SACHS INFLATION  vs.  AMERICAN FUNDS 2010

GOLDMAN SACHS INFLATION

GOLDMAN Performance

0 of 100

Over the last 90 days GOLDMAN SACHS INFLATION has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, GOLDMAN SACHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AMERICAN FUNDS 2010

AMERICAN Performance

0 of 100

Over the last 90 days AMERICAN FUNDS 2010 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, AMERICAN FUNDS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GOLDMAN SACHS and AMERICAN FUNDS

The main advantage of trading using opposite GOLDMAN SACHS and AMERICAN FUNDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS position performs unexpectedly, AMERICAN FUNDS 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 AMERICAN FUNDS will offset losses from the drop in AMERICAN FUNDS's long position.

The idea behind GOLDMAN SACHS INFLATION and AMERICAN FUNDS 2010 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.