Correlation Between Goldman Sachs and Hennessy

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

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

Diversification Opportunities for Goldman Sachs and Hennessy

0.23

Correlation Coefficient

Goldman Sachs  Hennessy

Modest diversification

The 3 months correlation between Goldman and Hennessy is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Real and Hennessy Bp Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Midstream 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 Real are associated (or correlated) with Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Midstream has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Hennessy go up and down completely randomly.

Pair Corralation between Goldman Sachs and Hennessy

Assuming the 90 days horizon Goldman Sachs is expected to generate 5.23 times less return on investment than Hennessy. But when comparing it to its historical volatility, Goldman Sachs Real is 1.2 times less risky than Hennessy. It trades about 0.02 of its potential returns per unit of risk. Hennessy Bp Midstream is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,304  in Hennessy Bp Midstream on December 30, 2024 and sell it today you would earn a total of  107.00  from holding Hennessy Bp Midstream or generate 8.21% return on investment over 90 days.

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

Goldman Sachs Real  vs.  Hennessy Bp Midstream

Goldman Sachs Real

Risk-Adjusted Performance

Weak

Over the last 90 days Goldman Sachs Real has generated negative risk-adjusted returns adding no value to fund investors. 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.

Hennessy Bp Midstream

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Midstream are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hennessy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Goldman Sachs and Hennessy

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

The idea behind Goldman Sachs Real and Hennessy Bp Midstream 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.