Correlation Between Goldman Sachs and Cadence Bancorp

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

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

Diversification Opportunities for Goldman Sachs and Cadence Bancorp

0.94

Correlation Coefficient

Goldman Sachs  Cadence Bancorp

Almost no diversification

The 3 months correlation between Goldman and Cadence is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Cadence Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bancorp 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 Group are associated (or correlated) with Cadence Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bancorp has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Cadence Bancorp go up and down completely randomly.

Pair Corralation between Goldman Sachs and Cadence Bancorp

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.86 times more return on investment than Cadence Bancorp. However, Goldman Sachs Group is 1.17 times less risky than Cadence Bancorp. It trades about 0.12 of its potential returns per unit of risk. Cadence Bancorp is currently generating about 0.09 per unit of risk. If you would invest  50,269  in Goldman Sachs Group on October 9, 2024 and sell it today you would earn a total of  8,070  from holding Goldman Sachs Group or generate 16.05% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Cadence Bancorp

Goldman Sachs Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cadence Bancorp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Cadence Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Cadence Bancorp

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

The idea behind Goldman Sachs Group and Cadence Bancorp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.