Correlation Between Invesco MSCI and Goldman Sachs

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

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

Diversification Opportunities for Invesco MSCI and Goldman Sachs

0.73

Correlation Coefficient

Invesco MSCI  Goldman Sachs

Poor diversification

The 3 months correlation between Invesco and Goldman is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Invesco MSCI Sustainable and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and Invesco MSCI 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 Invesco MSCI Sustainable 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 Future has no effect on the direction of Invesco MSCI i.e., Invesco MSCI and Goldman Sachs go up and down completely randomly.

Pair Corralation between Invesco MSCI and Goldman Sachs

Given the investment horizon of 90 days Invesco MSCI Sustainable is expected to under-perform the Goldman Sachs. In addition to that, Invesco MSCI is 1.41 times more volatile than Goldman Sachs Future. It trades about -0.02 of its total potential returns per unit of risk. Goldman Sachs Future is currently generating about 0.01 per unit of volatility. If you would invest  3,046  in Goldman Sachs Future on October 11, 2024 and sell it today you would earn a total of  22.30  from holding Goldman Sachs Future or generate 0.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Invesco MSCI Sustainable  vs.  Goldman Sachs Future

Invesco MSCI Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco MSCI Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Invesco MSCI and Goldman Sachs

The main advantage of trading using opposite Invesco MSCI and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco MSCI 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 Invesco MSCI Sustainable and Goldman Sachs Future 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.