Correlation Between Gamco Global and Goldman Sachs

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

By analyzing existing cross correlation between Gamco Global Telecommunications and Goldman Sachs International, you can compare the effects of market volatilities on Gamco Global and Goldman Sachs 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 Gamco Global with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Goldman Sachs.

Diversification Opportunities for Gamco Global and Goldman Sachs

0.65

Correlation Coefficient

Gamco Global  Goldman Sachs

Poor diversification

The 3 months correlation between Gamco and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Telecommunication and Goldman Sachs International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Intern and Gamco Global 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 Gamco Global Telecommunications are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Intern has no effect on the direction of Gamco Global i.e., Gamco Global and Goldman Sachs go up and down completely randomly.

Pair Corralation between Gamco Global and Goldman Sachs

Assuming the 90 days horizon Gamco Global is expected to generate 2.41 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Gamco Global Telecommunications is 1.14 times less risky than Goldman Sachs. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,322  in Goldman Sachs International on December 29, 2024 and sell it today you would earn a total of  133.00  from holding Goldman Sachs International or generate 10.06% return on investment over 90 days.

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

Gamco Global Telecommunication  vs.  Goldman Sachs International

Gamco Global Telecom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gamco Global Telecommunications are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs International are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gamco Global and Goldman Sachs

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

The idea behind Gamco Global Telecommunications and Goldman Sachs International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.