Correlation Between Goldman Sachs and PGIM Ultra

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

Diversification Opportunities for Goldman Sachs and PGIM Ultra

-0.83

Correlation Coefficient

Goldman Sachs  PGIM Ultra

Pay attention - limited upside

The 3 months correlation between Goldman and PGIM is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and PGIM Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Ultra Short 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 PGIM Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Ultra Short has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and PGIM Ultra go up and down completely randomly.

Pair Corralation between Goldman Sachs and PGIM Ultra

Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the PGIM Ultra. In addition to that, Goldman Sachs is 31.81 times more volatile than PGIM Ultra Short. It trades about -0.3 of its total potential returns per unit of risk. PGIM Ultra Short is currently generating about 0.7 per unit of volatility. If you would invest  4,937  in PGIM Ultra Short on October 6, 2024 and sell it today you would earn a total of  19.00  from holding PGIM Ultra Short or generate 0.38% return on investment over 90 days.

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

Goldman Sachs Future  vs.  PGIM Ultra Short

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.

PGIM Ultra Short

Risk-Adjusted Performance

56 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Ultra Short are ranked lower than 56 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, PGIM Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Goldman Sachs and PGIM Ultra

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

The idea behind Goldman Sachs Future and PGIM Ultra Short 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.