Correlation Between Brookfield Asset and Goldman Sachs

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

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

Diversification Opportunities for Brookfield Asset and Goldman Sachs

0.91

Correlation Coefficient

Brookfield Asset  Goldman Sachs

Almost no diversification

The 3 months correlation between Brookfield and Goldman is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and Brookfield Asset 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 Brookfield Asset Management 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 Group has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Goldman Sachs go up and down completely randomly.

Pair Corralation between Brookfield Asset and Goldman Sachs

Considering the 90-day investment horizon Brookfield Asset Management is expected to under-perform the Goldman Sachs. In addition to that, Brookfield Asset is 1.24 times more volatile than Goldman Sachs Group. It trades about -0.06 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about -0.03 per unit of volatility. If you would invest  57,072  in Goldman Sachs Group on December 29, 2024 and sell it today you would lose (2,760) from holding Goldman Sachs Group or give up 4.84% of portfolio value over 90 days.

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

Brookfield Asset Management  vs.  Goldman Sachs Group

Brookfield Asset Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Goldman Sachs Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brookfield Asset and Goldman Sachs

The main advantage of trading using opposite Brookfield Asset and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset 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 Brookfield Asset Management and Goldman Sachs Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.