Correlation Between Goldman Sachs and GDEF

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

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

Diversification Opportunities for Goldman Sachs and GDEF

0.0

Correlation Coefficient

Goldman Sachs  GDEF

Pay attention - limited upside

The 3 months correlation between Goldman and GDEF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs and GDEF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDEF 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 are associated (or correlated) with GDEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDEF has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and GDEF go up and down completely randomly.

Pair Corralation between Goldman Sachs and GDEF

If you would invest (100.00) in GDEF on December 11, 2024 and sell it today you would earn a total of  100.00  from holding GDEF or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Goldman Sachs  vs.  GDEF

Goldman Sachs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

GDEF

Risk-Adjusted Performance

Very Weak

Over the last 90 days GDEF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, GDEF is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Goldman Sachs and GDEF

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

The idea behind Goldman Sachs and GDEF 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..