Correlation Between Goldman Sachs and American Beacon

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

Diversification Opportunities for Goldman Sachs and American Beacon

-0.48

Correlation Coefficient

Goldman Sachs  American Beacon

Very good diversification

The 3 months correlation between Goldman and American is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and American Beacon Sound in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Sound 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Sound has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Beacon go up and down completely randomly.

Pair Corralation between Goldman Sachs and American Beacon

Assuming the 90 days horizon Goldman Sachs Inflation is expected to under-perform the American Beacon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Goldman Sachs Inflation is 1.01 times less risky than American Beacon. The mutual fund trades about -0.17 of its potential returns per unit of risk. The American Beacon Sound is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  778.00  in American Beacon Sound on September 25, 2024 and sell it today you would earn a total of  9.00  from holding American Beacon Sound or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Goldman Sachs Inflation  vs.  American Beacon Sound

Goldman Sachs Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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 current stock price disturbance, may contribute to short-term losses for the investors.

American Beacon Sound

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Sound are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, American Beacon 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 Beacon

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

The idea behind Goldman Sachs Inflation and American Beacon Sound 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .