Correlation Between Fidelity Mid and Goldman Sachs

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

Diversification Opportunities for Fidelity Mid and Goldman Sachs

0.68

Correlation Coefficient

Fidelity Mid  Goldman Sachs

Poor diversification

The 3 months correlation between Fidelity and Goldman is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Mid Cap and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute and Fidelity Mid 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 Mid Cap 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 Absolute has no effect on the direction of Fidelity Mid i.e., Fidelity Mid and Goldman Sachs go up and down completely randomly.

Pair Corralation between Fidelity Mid and Goldman Sachs

Assuming the 90 days horizon Fidelity Mid Cap is expected to generate 2.14 times more return on investment than Goldman Sachs. However, Fidelity Mid is 2.14 times more volatile than Goldman Sachs Absolute. It trades about 0.1 of its potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.07 per unit of risk. If you would invest  3,410  in Fidelity Mid Cap on September 19, 2024 and sell it today you would earn a total of  159.00  from holding Fidelity Mid Cap or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Fidelity Mid Cap  vs.  Goldman Sachs Absolute

Fidelity Mid Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mid Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Absolute

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Absolute are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Mid and Goldman Sachs

The main advantage of trading using opposite Fidelity Mid and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Mid 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 Mid Cap and Goldman Sachs Absolute 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 Commodity Directory module to find actively traded commodities issued by global exchanges.