Correlation Between Goldman Sachs and Sprott Physical

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

By analyzing existing cross correlation between Goldman Sachs Physical and Sprott Physical Silver, you can compare the effects of market volatilities on Goldman Sachs and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Sprott Physical.

Diversification Opportunities for Goldman Sachs and Sprott Physical

0.91

Correlation Coefficient

Goldman Sachs  Sprott Physical

Almost no diversification

The 3 months correlation between Goldman and Sprott is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Physical and Sprott Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Silver 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 Physical are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Silver has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Sprott Physical go up and down completely randomly.

Pair Corralation between Goldman Sachs and Sprott Physical

Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.08 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, Goldman Sachs Physical is 1.92 times less risky than Sprott Physical. It trades about 0.1 of its potential returns per unit of risk. Sprott Physical Silver is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,011  in Sprott Physical Silver on September 12, 2024 and sell it today you would earn a total of  59.00  from holding Sprott Physical Silver or generate 5.84% return on investment over 90 days.

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

Goldman Sachs Physical  vs.  Sprott Physical Silver

Goldman Sachs Physical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Physical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sprott Physical Silver

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goldman Sachs and Sprott Physical

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

The idea behind Goldman Sachs Physical and Sprott Physical Silver 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.