Correlation Between Goldman Sachs and Great West

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

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

Diversification Opportunities for Goldman Sachs and Great West

0.1

Correlation Coefficient

Goldman Sachs  Great West

Average diversification

The 3 months correlation between Goldman and Great is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Enhanced and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman 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 Enhanced are associated (or correlated) with Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Great West go up and down completely randomly.

Pair Corralation between Goldman Sachs and Great West

Assuming the 90 days horizon Goldman Sachs Enhanced is not expected to generate positive returns. However, Goldman Sachs Enhanced is 31.01 times less risky than Great West. It waists most of its returns potential to compensate for thr risk taken. Great West is generating about -0.1 per unit of risk. If you would invest  955.00  in Goldman Sachs Enhanced on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Goldman Sachs Enhanced or generate 0.0% return on investment over 90 days.

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

Goldman Sachs Enhanced  vs.  Great West Goldman Sachs

Goldman Sachs Enhanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Enhanced are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great West Goldman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Goldman Sachs has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Great West

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

The idea behind Goldman Sachs Enhanced and Great West 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.