Correlation Between GOLDMAN SACHS and TVA

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

Diversification Opportunities for GOLDMAN SACHS and TVA

-0.73

Correlation Coefficient

GOLDMAN SACHS  TVA

Pay attention - limited upside

The 3 months correlation between GOLDMAN and TVA is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR and TVA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TVA Group 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 TVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TVA Group has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and TVA go up and down completely randomly.

Pair Corralation between GOLDMAN SACHS and TVA

Assuming the 90 days trading horizon GOLDMAN SACHS CDR is expected to generate 0.26 times more return on investment than TVA. However, GOLDMAN SACHS CDR is 3.77 times less risky than TVA. It trades about -0.1 of its potential returns per unit of risk. TVA Group is currently generating about -0.23 per unit of risk. If you would invest  2,985  in GOLDMAN SACHS CDR on September 12, 2024 and sell it today you would lose (71.00) from holding GOLDMAN SACHS CDR or give up 2.38% of portfolio value over 90 days.

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

GOLDMAN SACHS CDR  vs.  TVA Group

GOLDMAN SACHS CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GOLDMAN SACHS displayed solid returns over the last few months and may actually be approaching a breakup point.

TVA Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TVA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GOLDMAN SACHS and TVA

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

The idea behind GOLDMAN SACHS CDR and TVA Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.