Correlation Between Wells Fargo and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Short Term and Goldman Sachs Small, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Goldman Sachs.
Diversification Opportunities for Wells Fargo and Goldman Sachs
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Short Term and Goldman Sachs Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Small and Wells Fargo 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 Wells Fargo Short Term 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 Small has no effect on the direction of Wells Fargo i.e., Wells Fargo and Goldman Sachs go up and down completely randomly.
Pair Corralation between Wells Fargo and Goldman Sachs
Assuming the 90 days horizon Wells Fargo Short Term is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wells Fargo Short Term is 10.55 times less risky than Goldman Sachs. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Goldman Sachs Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,323 in Goldman Sachs Small on April 30, 2025 and sell it today you would earn a total of 192.00 from holding Goldman Sachs Small or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Wells Fargo Short Term vs. Goldman Sachs Small
Performance |
| Timeline |
| Wells Fargo Short |
| Goldman Sachs Small |
Wells Fargo and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Goldman Sachs
The main advantage of trading using opposite Wells Fargo and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Morningstar Defensive Bond | Wells Fargo vs. Touchstone Premium Yield | Wells Fargo vs. California Municipal Portfolio | Wells Fargo vs. Ab Bond Inflation |
| Goldman Sachs vs. Artisan High Income | Goldman Sachs vs. Bbh Intermediate Municipal | Goldman Sachs vs. Flexible Bond Portfolio | Goldman Sachs vs. Morningstar Defensive Bond |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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