Correlation Between Federal Home and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Federal Home 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 Federal Home and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home Loan and Goldman Sachs Clean, you can compare the effects of market volatilities on Federal Home 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 Federal Home with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Goldman Sachs.
Diversification Opportunities for Federal Home and Goldman Sachs
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federal and Goldman is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Federal Home 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 Federal Home Loan 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 Clean has no effect on the direction of Federal Home i.e., Federal Home and Goldman Sachs go up and down completely randomly.
Pair Corralation between Federal Home and Goldman Sachs
Given the investment horizon of 90 days Federal Home Loan is expected to generate 5.21 times more return on investment than Goldman Sachs. However, Federal Home is 5.21 times more volatile than Goldman Sachs Clean. It trades about 0.14 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about 0.13 per unit of risk. If you would invest 525.00 in Federal Home Loan on April 3, 2025 and sell it today you would earn a total of 297.00 from holding Federal Home Loan or generate 56.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. Goldman Sachs Clean
Performance |
| Timeline |
| Federal Home Loan |
| Goldman Sachs Clean |
Federal Home and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Goldman Sachs
The main advantage of trading using opposite Federal Home and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home 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.| Federal Home vs. Paiute Oil Mining | Federal Home vs. Pinterest | Federal Home vs. Imax Corp | Federal Home vs. Kuke Music Holding |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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