Correlation Between Fidelity International and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Fidelity International 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 International 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 International Small and Goldman Sachs International, you can compare the effects of market volatilities on Fidelity International 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 International with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Goldman Sachs.

Diversification Opportunities for Fidelity International and Goldman Sachs

0.97

Correlation Coefficient

Fidelity International  Goldman Sachs

Almost no diversification

The 3 months correlation between Fidelity and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Small and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern and Fidelity International 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 International Small 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 Intern has no effect on the direction of Fidelity International i.e., Fidelity International and Goldman Sachs go up and down completely randomly.

Pair Corralation between Fidelity International and Goldman Sachs

Assuming the 90 days horizon Fidelity International Small is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity International Small is 1.22 times less risky than Goldman Sachs. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Goldman Sachs International is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,343  in Goldman Sachs International on September 2, 2024 and sell it today you would lose (36.00) from holding Goldman Sachs International or give up 2.68% of portfolio value over 90 days.

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

Fidelity International Small  vs.  Goldman Sachs International

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity International and Goldman Sachs

The main advantage of trading using opposite Fidelity International and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International 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 International Small and Goldman Sachs International 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.