Correlation Between Goldman Sachs and AVANTOR

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

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

Diversification Opportunities for Goldman Sachs and AVANTOR

-0.43

Correlation Coefficient

Goldman Sachs  AVANTOR

Very good diversification

The 3 months correlation between Goldman and AVANTOR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Equity and AVANTOR FDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVANTOR FDG INC 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 Equity are associated (or correlated) with AVANTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVANTOR FDG INC has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and AVANTOR go up and down completely randomly.

Pair Corralation between Goldman Sachs and AVANTOR

Assuming the 90 days horizon Goldman Sachs is expected to generate 33.19 times less return on investment than AVANTOR. But when comparing it to its historical volatility, Goldman Sachs Equity is 65.66 times less risky than AVANTOR. It trades about 0.09 of its potential returns per unit of risk. AVANTOR FDG INC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,385  in AVANTOR FDG INC on August 31, 2024 and sell it today you would lose (271.00) from holding AVANTOR FDG INC or give up 2.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Goldman Sachs Equity  vs.  AVANTOR FDG INC

Goldman Sachs Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AVANTOR FDG INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AVANTOR FDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AVANTOR FDG INC investors.

Pair Trading with Goldman Sachs and AVANTOR

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

The idea behind Goldman Sachs Equity and AVANTOR FDG INC 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.