Correlation Between Schwab Small-cap and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Schwab Small-cap 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 Schwab Small-cap and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Small Cap Index and Goldman Sachs Small, you can compare the effects of market volatilities on Schwab Small-cap 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 Schwab Small-cap with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Small-cap and Goldman Sachs.
Diversification Opportunities for Schwab Small-cap and Goldman Sachs
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Schwab and Goldman is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Small Cap Index 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 Schwab Small-cap 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 Schwab Small Cap Index 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 Schwab Small-cap i.e., Schwab Small-cap and Goldman Sachs go up and down completely randomly.
Pair Corralation between Schwab Small-cap and Goldman Sachs
Assuming the 90 days horizon Schwab Small-cap is expected to generate 1.09 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Schwab Small Cap Index is 1.03 times less risky than Goldman Sachs. It trades about 0.18 of its potential returns per unit of risk. Goldman Sachs Small is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,657 in Goldman Sachs Small on June 3, 2025 and sell it today you would earn a total of 378.00 from holding Goldman Sachs Small or generate 14.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Small Cap Index vs. Goldman Sachs Small
Performance |
| Timeline |
| Schwab Small Cap |
| Goldman Sachs Small |
Schwab Small-cap and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Small-cap and Goldman Sachs
The main advantage of trading using opposite Schwab Small-cap and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Small-cap 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.| Schwab Small-cap vs. Schwab International Index | Schwab Small-cap vs. Schwab Total Stock | Schwab Small-cap vs. Schwab Sp 500 | Schwab Small-cap vs. Schwab 1000 Index |
| Goldman Sachs vs. California Municipal Portfolio | Goldman Sachs vs. Gurtin California Muni | Goldman Sachs vs. Ishares Municipal Bond | Goldman Sachs vs. Dunham Porategovernment 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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