Correlation Between Goldman Sachs and JP Morgan

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

By analyzing existing cross correlation between Goldman Sachs Future and JP Morgan Exchange Traded, you can compare the effects of market volatilities on Goldman Sachs and JP Morgan 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 JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and JP Morgan.

Diversification Opportunities for Goldman Sachs and JP Morgan

0.73

Correlation Coefficient

Goldman Sachs  JP Morgan

Poor diversification

The 3 months correlation between Goldman and JIRE is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange 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 Future are associated (or correlated) with JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and JP Morgan go up and down completely randomly.

Pair Corralation between Goldman Sachs and JP Morgan

Given the investment horizon of 90 days Goldman Sachs Future is expected to generate 0.77 times more return on investment than JP Morgan. However, Goldman Sachs Future is 1.29 times less risky than JP Morgan. It trades about 0.01 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.12 per unit of risk. If you would invest  3,662  in Goldman Sachs Future on August 30, 2024 and sell it today you would earn a total of  10.00  from holding Goldman Sachs Future or generate 0.27% return on investment over 90 days.

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

Goldman Sachs Future  vs.  JP Morgan Exchange Traded

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

JP Morgan Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JP Morgan Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Goldman Sachs and JP Morgan

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

The idea behind Goldman Sachs Future and JP Morgan Exchange Traded 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.