Correlation Between F/m Investments and Goldman Sachs

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

By analyzing existing cross correlation between Fm Investments Large and Goldman Sachs Large, you can compare the effects of market volatilities on F/m Investments and Goldman Sachs 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 F/m Investments with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of F/m Investments and Goldman Sachs.

Diversification Opportunities for F/m Investments and Goldman Sachs

-0.28

Correlation Coefficient

F/m Investments  Goldman Sachs

Very good diversification

The 3 months correlation between F/m and Goldman is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large and F/m Investments 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 Fm Investments Large are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Large has no effect on the direction of F/m Investments i.e., F/m Investments and Goldman Sachs go up and down completely randomly.

Pair Corralation between F/m Investments and Goldman Sachs

Assuming the 90 days horizon Fm Investments Large is expected to generate 1.41 times more return on investment than Goldman Sachs. However, F/m Investments is 1.41 times more volatile than Goldman Sachs Large. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Large is currently generating about 0.02 per unit of risk. If you would invest  1,083  in Fm Investments Large on October 2, 2024 and sell it today you would earn a total of  700.00  from holding Fm Investments Large or generate 64.64% return on investment over 90 days.

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

Fm Investments Large  vs.  Goldman Sachs Large

Fm Investments Large

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Fm Investments Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, F/m Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with F/m Investments and Goldman Sachs

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

The idea behind Fm Investments Large and Goldman Sachs Large 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.