Correlation Between Goldman Sachs and Federated Hermes

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

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

Diversification Opportunities for Goldman Sachs and Federated Hermes

1.0

Correlation Coefficient

Goldman Sachs  Federated Hermes

No risk reduction

The 3 months correlation between Goldman and Federated is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf 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 Inflation are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Inf has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Federated Hermes go up and down completely randomly.

Pair Corralation between Goldman Sachs and Federated Hermes

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.05 times less return on investment than Federated Hermes. In addition to that, Goldman Sachs is 1.01 times more volatile than Federated Hermes Inflation. It trades about 0.17 of its total potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.18 per unit of volatility. If you would invest  964.00  in Federated Hermes Inflation on December 30, 2024 and sell it today you would earn a total of  28.00  from holding Federated Hermes Inflation or generate 2.9% return on investment over 90 days.

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

Goldman Sachs Inflation  vs.  Federated Hermes Inflation

Goldman Sachs Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Inflation are ranked lower than 13 (%) 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.

Federated Hermes Inf

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Inflation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes 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 Federated Hermes

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

The idea behind Goldman Sachs Inflation and Federated Hermes Inflation 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..