Correlation Between Fidelity Managed and Goldman Sachs

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

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

Diversification Opportunities for Fidelity Managed and Goldman Sachs

0.14

Correlation Coefficient

Fidelity Managed  Goldman Sachs

Average diversification

The 3 months correlation between Fidelity and Goldman is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Goldman Sachs Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Growth and Fidelity Managed 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 Fidelity Managed Retirement 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 Growth has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Goldman Sachs go up and down completely randomly.

Pair Corralation between Fidelity Managed and Goldman Sachs

Assuming the 90 days horizon Fidelity Managed is expected to generate 6.0 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Fidelity Managed Retirement is 1.89 times less risky than Goldman Sachs. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs Growth is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,861  in Goldman Sachs Growth on August 31, 2024 and sell it today you would earn a total of  377.00  from holding Goldman Sachs Growth or generate 7.76% return on investment over 90 days.

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

Fidelity Managed Retirement  vs.  Goldman Sachs Growth

Fidelity Managed Ret

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Managed Retirement are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Fidelity Managed and Goldman Sachs

The main advantage of trading using opposite Fidelity Managed and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Managed 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 Fidelity Managed Retirement and Goldman Sachs Growth 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.