Correlation Between Goldman Sachs and Stifel Financial

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

Diversification Opportunities for Goldman Sachs and Stifel Financial

0.95

Correlation Coefficient

Goldman Sachs  Stifel Financial

Almost no diversification

The 3 months correlation between Goldman and Stifel is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Stifel Financial go up and down completely randomly.

Pair Corralation between Goldman Sachs and Stifel Financial

Allowing for the 90-day total investment horizon Goldman Sachs is expected to generate 1.35 times less return on investment than Stifel Financial. In addition to that, Goldman Sachs is 1.03 times more volatile than Stifel Financial. It trades about 0.17 of its total potential returns per unit of risk. Stifel Financial is currently generating about 0.24 per unit of volatility. If you would invest  8,526  in Stifel Financial on September 3, 2024 and sell it today you would earn a total of  3,054  from holding Stifel Financial or generate 35.82% 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.  Stifel Financial

Goldman Sachs Group

Risk-Adjusted Performance

13 of 100

Good

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.

Stifel Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Stifel Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Stifel Financial

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

The idea behind Goldman Sachs Group and Stifel Financial 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.