Correlation Between Goldman Sachs and HUGE Old

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

Diversification Opportunities for Goldman Sachs and HUGE Old

-0.72

Correlation Coefficient

Goldman Sachs  HUGE Old

Pay attention - limited upside

The 3 months correlation between Goldman and HUGE is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and HUGE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUGE Old 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 HUGE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUGE Old has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and HUGE Old go up and down completely randomly.

Pair Corralation between Goldman Sachs and HUGE Old

If you would invest  58,123  in Goldman Sachs Group on October 26, 2024 and sell it today you would earn a total of  5,804  from holding Goldman Sachs Group or generate 9.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.26%
Values	Daily Returns

Goldman Sachs Group  vs.  HUGE Old

Goldman Sachs Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 12 (%) 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.

HUGE Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUGE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HUGE Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Goldman Sachs and HUGE Old

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

The idea behind Goldman Sachs Group and HUGE Old 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.