Correlation Between Goldman Sachs and FlatexDEGIRO

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

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

Diversification Opportunities for Goldman Sachs and FlatexDEGIRO

0.36

Correlation Coefficient

Goldman Sachs  FlatexDEGIRO

Weak diversification

The 3 months correlation between Goldman and FlatexDEGIRO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and flatexDEGIRO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on flatexDEGIRO AG 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 The Goldman Sachs are associated (or correlated) with FlatexDEGIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of flatexDEGIRO AG has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and FlatexDEGIRO go up and down completely randomly.

Pair Corralation between Goldman Sachs and FlatexDEGIRO

Assuming the 90 days horizon The Goldman Sachs is expected to generate 1.19 times more return on investment than FlatexDEGIRO. However, Goldman Sachs is 1.19 times more volatile than flatexDEGIRO AG. It trades about 0.1 of its potential returns per unit of risk. flatexDEGIRO AG is currently generating about 0.06 per unit of risk. If you would invest  42,894  in The Goldman Sachs on September 23, 2024 and sell it today you would earn a total of  11,896  from holding The Goldman Sachs or generate 27.73% return on investment over 90 days.

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

The Goldman Sachs  vs.  flatexDEGIRO AG

Goldman Sachs

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

flatexDEGIRO AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in flatexDEGIRO AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, FlatexDEGIRO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and FlatexDEGIRO

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

The idea behind The Goldman Sachs and flatexDEGIRO AG 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.