Correlation Between Goldman Sachs and Jp Morgan

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

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

Diversification Opportunities for Goldman Sachs and Jp Morgan

0.05

Correlation Coefficient

Goldman Sachs  Jp Morgan

Significant diversification

The 3 months correlation between Goldman and JTSQX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and Jp Morgan Smartretirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jp Morgan Smartretirement 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 Inflation are associated (or correlated) with Jp Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jp Morgan Smartretirement has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Jp Morgan go up and down completely randomly.

Pair Corralation between Goldman Sachs and Jp Morgan

Assuming the 90 days horizon Goldman Sachs Inflation is expected to generate 0.33 times more return on investment than Jp Morgan. However, Goldman Sachs Inflation is 3.03 times less risky than Jp Morgan. It trades about 0.17 of its potential returns per unit of risk. Jp Morgan Smartretirement is currently generating about -0.01 per unit of risk. If you would invest  901.00  in Goldman Sachs Inflation on December 29, 2024 and sell it today you would earn a total of  25.00  from holding Goldman Sachs Inflation or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Goldman Sachs Inflation  vs.  Jp Morgan Smartretirement

Goldman Sachs Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Inflation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jp Morgan Smartretirement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jp Morgan Smartretirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jp Morgan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Jp Morgan

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

The idea behind Goldman Sachs Inflation and Jp Morgan Smartretirement 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.