Correlation Between Aig Government and Goldman Sachs

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

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

Diversification Opportunities for Aig Government and Goldman Sachs

0.65

Correlation Coefficient

Aig Government  Goldman Sachs

Poor diversification

The 3 months correlation between Aig and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Goldman Sachs Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Government and Aig Government 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 Aig Government Money 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 Government has no effect on the direction of Aig Government i.e., Aig Government and Goldman Sachs go up and down completely randomly.

Pair Corralation between Aig Government and Goldman Sachs

Assuming the 90 days horizon Aig Government Money is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aig Government Money is 1.66 times less risky than Goldman Sachs. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Goldman Sachs Government is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,269  in Goldman Sachs Government on December 28, 2024 and sell it today you would earn a total of  25.00  from holding Goldman Sachs Government or generate 1.97% return on investment over 90 days.

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

Aig Government Money  vs.  Goldman Sachs Government

Aig Government Money

Risk-Adjusted Performance

Very Weak

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

Goldman Sachs Government

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Government are ranked lower than 8 (%) 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.

Pair Trading with Aig Government and Goldman Sachs

The main advantage of trading using opposite Aig Government and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government 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 Aig Government Money and Goldman Sachs Government 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.