Correlation Between Goldman Sachs and Prudential Global

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Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Prudential Global 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 Prudential Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Growth and Prudential Global Total, you can compare the effects of market volatilities on Goldman Sachs and Prudential Global 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 Prudential Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Prudential Global.

Diversification Opportunities for Goldman Sachs and Prudential Global

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GOLDMAN and Prudential is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Growth and Prudential Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Global Total 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 Growth are associated (or correlated) with Prudential Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Global Total has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Prudential Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Prudential Global

Assuming the 90 days horizon Goldman Sachs Growth is expected to generate 5.23 times more return on investment than Prudential Global. However, Goldman Sachs is 5.23 times more volatile than Prudential Global Total. It trades about 0.36 of its potential returns per unit of risk. Prudential Global Total is currently generating about 0.03 per unit of risk. If you would invest  2,047  in Goldman Sachs Growth on September 5, 2024 and sell it today you would earn a total of  344.00  from holding Goldman Sachs Growth or generate 16.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Goldman Sachs Growth  vs.  Prudential Global Total

 Performance 
       Timeline  
Goldman Sachs Growth 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Growth are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.
Prudential Global Total 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Prudential Global Total has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Prudential Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs and Prudential Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goldman Sachs and Prudential Global

The main advantage of trading using opposite Goldman Sachs and Prudential Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Prudential Global 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 Prudential Global will offset losses from the drop in Prudential Global's long position.
The idea behind Goldman Sachs Growth and Prudential Global Total 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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