Correlation Between Goldman Sachs and CIBC Canadian

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

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

Diversification Opportunities for Goldman Sachs and CIBC Canadian

0.62

Correlation Coefficient

Goldman Sachs  CIBC Canadian

Poor diversification

The 3 months correlation between Goldman and CIBC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and CIBC Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Canadian Equity 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 ActiveBeta are associated (or correlated) with CIBC Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Canadian Equity has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and CIBC Canadian go up and down completely randomly.

Pair Corralation between Goldman Sachs and CIBC Canadian

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to generate 0.82 times more return on investment than CIBC Canadian. However, Goldman Sachs ActiveBeta is 1.22 times less risky than CIBC Canadian. It trades about 0.1 of its potential returns per unit of risk. CIBC Canadian Equity is currently generating about 0.03 per unit of risk. If you would invest  4,930  in Goldman Sachs ActiveBeta on December 29, 2024 and sell it today you would earn a total of  200.00  from holding Goldman Sachs ActiveBeta or generate 4.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Goldman Sachs ActiveBeta  vs.  CIBC Canadian Equity

Goldman Sachs ActiveBeta

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ActiveBeta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CIBC Canadian Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CIBC Canadian Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CIBC Canadian is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and CIBC Canadian

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

The idea behind Goldman Sachs ActiveBeta and CIBC Canadian Equity 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.