Correlation Between Casa De and Goldman Sachs

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

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

Diversification Opportunities for Casa De and Goldman Sachs

0.89

Correlation Coefficient

Casa De  Goldman Sachs

Very poor diversification

The 3 months correlation between Casa and Goldman is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Casa de Bolsa and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Casa De 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 Casa de Bolsa 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 has no effect on the direction of Casa De i.e., Casa De and Goldman Sachs go up and down completely randomly.

Pair Corralation between Casa De and Goldman Sachs

Assuming the 90 days trading horizon Casa De is expected to generate 8.3 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Casa de Bolsa is 6.21 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  929,374  in The Goldman Sachs on September 16, 2024 and sell it today you would earn a total of  249,226  from holding The Goldman Sachs or generate 26.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Casa de Bolsa  vs.  The Goldman Sachs

Casa de Bolsa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casa de Bolsa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Casa De is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casa De and Goldman Sachs

The main advantage of trading using opposite Casa De and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casa De 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 Casa de Bolsa and The Goldman Sachs 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .