Correlation Between GOLDMAN SACHS and Brompton Lifeco

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

By analyzing existing cross correlation between GOLDMAN SACHS CDR and Brompton Lifeco Split, you can compare the effects of market volatilities on GOLDMAN SACHS and Brompton Lifeco 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 Brompton Lifeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDMAN SACHS and Brompton Lifeco.

Diversification Opportunities for GOLDMAN SACHS and Brompton Lifeco

-0.42

Correlation Coefficient

GOLDMAN SACHS  Brompton Lifeco

Very good diversification

The 3 months correlation between GOLDMAN and Brompton is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR and Brompton Lifeco Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Lifeco Split 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 CDR are associated (or correlated) with Brompton Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Lifeco Split has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and Brompton Lifeco go up and down completely randomly.

Pair Corralation between GOLDMAN SACHS and Brompton Lifeco

Assuming the 90 days trading horizon GOLDMAN SACHS CDR is expected to generate 0.87 times more return on investment than Brompton Lifeco. However, GOLDMAN SACHS CDR is 1.15 times less risky than Brompton Lifeco. It trades about 0.04 of its potential returns per unit of risk. Brompton Lifeco Split is currently generating about -0.06 per unit of risk. If you would invest  2,986  in GOLDMAN SACHS CDR on December 2, 2024 and sell it today you would earn a total of  101.00  from holding GOLDMAN SACHS CDR or generate 3.38% return on investment over 90 days.

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

GOLDMAN SACHS CDR  vs.  Brompton Lifeco Split

GOLDMAN SACHS CDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GOLDMAN SACHS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Brompton Lifeco Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brompton Lifeco Split has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with GOLDMAN SACHS and Brompton Lifeco

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

The idea behind GOLDMAN SACHS CDR and Brompton Lifeco Split 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.