Correlation Between Goldman Sachs and Cathedra Bitcoin

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

Diversification Opportunities for Goldman Sachs and Cathedra Bitcoin

-0.39

Correlation Coefficient

Goldman Sachs  Cathedra Bitcoin

Very good diversification

The 3 months correlation between Goldman and Cathedra is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Cathedra Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedra Bitcoin 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 Cathedra Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedra Bitcoin has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Cathedra Bitcoin go up and down completely randomly.

Pair Corralation between Goldman Sachs and Cathedra Bitcoin

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.3 times more return on investment than Cathedra Bitcoin. However, Goldman Sachs Group is 3.37 times less risky than Cathedra Bitcoin. It trades about 0.17 of its potential returns per unit of risk. Cathedra Bitcoin is currently generating about -0.01 per unit of risk. If you would invest  48,746  in Goldman Sachs Group on August 31, 2024 and sell it today you would earn a total of  11,797  from holding Goldman Sachs Group or generate 24.2% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Cathedra Bitcoin

Goldman Sachs Group

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 13 (%) 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.

Cathedra Bitcoin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cathedra Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cathedra Bitcoin is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Goldman Sachs and Cathedra Bitcoin

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

The idea behind Goldman Sachs Group and Cathedra Bitcoin 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.