Correlation Between Goldman Sachs and Vy(r) Templeton

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Vy(r) Templeton 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 Vy(r) Templeton 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 Vy Templeton Foreign, you can compare the effects of market volatilities on Goldman Sachs and Vy(r) Templeton 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 Vy(r) Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Vy(r) Templeton.

Diversification Opportunities for Goldman Sachs and Vy(r) Templeton

0.87

Correlation Coefficient

Goldman Sachs  Vy(r) Templeton

Very poor diversification

The 3 months correlation between Goldman and Vy(r) is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and Vy Templeton Foreign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Templeton Foreign 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 Vy(r) Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Templeton Foreign has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Vy(r) Templeton go up and down completely randomly.

Pair Corralation between Goldman Sachs and Vy(r) Templeton

Assuming the 90 days horizon Goldman Sachs is expected to generate 3.97 times less return on investment than Vy(r) Templeton. But when comparing it to its historical volatility, Goldman Sachs Inflation is 2.43 times less risky than Vy(r) Templeton. It trades about 0.23 of its potential returns per unit of risk. Vy Templeton Foreign is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,004  in Vy Templeton Foreign on December 21, 2024 and sell it today you would earn a total of  155.00  from holding Vy Templeton Foreign or generate 15.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Goldman Sachs Inflation  vs.  Vy Templeton Foreign

Goldman Sachs Inflation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Inflation are ranked lower than 18 (%) 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.

Vy Templeton Foreign

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Templeton Foreign are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vy(r) Templeton showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Vy(r) Templeton

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

The idea behind Goldman Sachs Inflation and Vy Templeton Foreign 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.