Correlation Between Goldman Sachs and PJT Partners

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

Diversification Opportunities for Goldman Sachs and PJT Partners

0.66

Correlation Coefficient

Goldman Sachs  PJT Partners

Poor diversification

The 3 months correlation between Goldman and PJT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners 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 PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and PJT Partners go up and down completely randomly.

Pair Corralation between Goldman Sachs and PJT Partners

Assuming the 90 days horizon Goldman Sachs is expected to generate 7.11 times less return on investment than PJT Partners. But when comparing it to its historical volatility, The Goldman Sachs is 3.04 times less risky than PJT Partners. It trades about 0.07 of its potential returns per unit of risk. PJT Partners is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9,899  in PJT Partners on September 13, 2024 and sell it today you would earn a total of  6,684  from holding PJT Partners or generate 67.52% return on investment over 90 days.

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

The Goldman Sachs  vs.  PJT Partners

Goldman Sachs

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PJT Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PJT Partners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking indicators, PJT Partners unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and PJT Partners

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

The idea behind The Goldman Sachs and PJT Partners 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.