Correlation Between Goldman Sachs and KKR Co

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and KKR Co 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 KKR Co 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 KKR Co LP, you can compare the effects of market volatilities on Goldman Sachs and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and KKR Co.

Diversification Opportunities for Goldman Sachs and KKR Co

0.95

Correlation Coefficient

Goldman Sachs  KKR Co

Almost no diversification

The 3 months correlation between Goldman and KKR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and KKR Co go up and down completely randomly.

Pair Corralation between Goldman Sachs and KKR Co

Assuming the 90 days horizon The Goldman Sachs is expected to generate 1.43 times more return on investment than KKR Co. However, Goldman Sachs is 1.43 times more volatile than KKR Co LP. It trades about 0.23 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.32 per unit of risk. If you would invest  48,080  in The Goldman Sachs on September 1, 2024 and sell it today you would earn a total of  9,560  from holding The Goldman Sachs or generate 19.88% return on investment over 90 days.

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

The Goldman Sachs  vs.  KKR Co LP

Goldman Sachs

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

KKR Co LP

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KKR Co reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and KKR Co

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

The idea behind The Goldman Sachs and KKR Co LP 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.