Correlation Between Goldman Sachs and Fidelity Convertible

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Fidelity Convertible 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 Fidelity Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldman Sachs Short and Fidelity Vertible Securities, you can compare the effects of market volatilities on Goldman Sachs and Fidelity Convertible 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 Fidelity Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Fidelity Convertible.

Diversification Opportunities for Goldman Sachs and Fidelity Convertible

0.46

Correlation Coefficient

Goldman Sachs  Fidelity Convertible

Very weak diversification

The 3 months correlation between Goldman and Fidelity is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Fidelity Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Convertible 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 Short are associated (or correlated) with Fidelity Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Convertible has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Fidelity Convertible go up and down completely randomly.

Pair Corralation between Goldman Sachs and Fidelity Convertible

Assuming the 90 days horizon Goldman Sachs is expected to generate 4.22 times less return on investment than Fidelity Convertible. But when comparing it to its historical volatility, Goldman Sachs Short is 7.8 times less risky than Fidelity Convertible. It trades about 0.09 of its potential returns per unit of risk. Fidelity Vertible Securities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,468  in Fidelity Vertible Securities on October 25, 2024 and sell it today you would earn a total of  92.00  from holding Fidelity Vertible Securities or generate 2.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Goldman Sachs Short  vs.  Fidelity Vertible Securities

Goldman Sachs Short

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Short are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Convertible

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Vertible Securities are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Convertible 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 Fidelity Convertible

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

The idea behind Goldman Sachs Short and Fidelity Vertible Securities 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.