Correlation Between Goldman Sachs and American Century

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

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

Diversification Opportunities for Goldman Sachs and American Century

-0.23

Correlation Coefficient

Goldman Sachs  American Century

Very good diversification

The 3 months correlation between Goldman and American is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Clean and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One and Goldman Sachs 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 Goldman Sachs Clean are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century One has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and American Century go up and down completely randomly.

Pair Corralation between Goldman Sachs and American Century

Assuming the 90 days horizon Goldman Sachs Clean is expected to under-perform the American Century. In addition to that, Goldman Sachs is 3.62 times more volatile than American Century One. It trades about -0.19 of its total potential returns per unit of risk. American Century One is currently generating about 0.11 per unit of volatility. If you would invest  1,027  in American Century One on September 12, 2024 and sell it today you would earn a total of  22.00  from holding American Century One or generate 2.14% return on investment over 90 days.

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

Goldman Sachs Clean  vs.  American Century One

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

American Century One

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Goldman Sachs and American Century

The main advantage of trading using opposite Goldman Sachs and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.

The idea behind Goldman Sachs Clean and American Century One 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.

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.