Correlation Between Prudential California and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Prudential California 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 Prudential California and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential California Muni and Goldman Sachs Short, you can compare the effects of market volatilities on Prudential California 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 Prudential California with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Goldman Sachs.
Diversification Opportunities for Prudential California and Goldman Sachs
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and Goldman is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Prudential California 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 Prudential California Muni 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 Short has no effect on the direction of Prudential California i.e., Prudential California and Goldman Sachs go up and down completely randomly.
Pair Corralation between Prudential California and Goldman Sachs
Assuming the 90 days horizon Prudential California is expected to generate 1.48 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Prudential California Muni is 1.08 times less risky than Goldman Sachs. It trades about 0.16 of its potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 962.00 in Goldman Sachs Short on April 21, 2025 and sell it today you would earn a total of 18.00 from holding Goldman Sachs Short or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential California Muni vs. Goldman Sachs Short
Performance |
| Timeline |
| Prudential California |
| Goldman Sachs Short |
Prudential California and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential California and Goldman Sachs
The main advantage of trading using opposite Prudential California and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California 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.| Prudential California vs. Valic Company I | Prudential California vs. Fpa Queens Road | Prudential California vs. Lord Abbett Small | Prudential California vs. Hennessy Nerstone Mid |
| Goldman Sachs vs. Voya Solution Conservative | Goldman Sachs vs. American Funds Conservative | Goldman Sachs vs. Mainstay Conservative Allocation | Goldman Sachs vs. Blackrock Conservative Prprdptfinstttnl |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |