Correlation Between Goldman Sachs and Vulcan Value

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

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

Diversification Opportunities for Goldman Sachs and Vulcan Value

0.82

Correlation Coefficient

Goldman Sachs  Vulcan Value

Very poor diversification

The 3 months correlation between Goldman and Vulcan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners 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 Future are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Vulcan Value go up and down completely randomly.

Pair Corralation between Goldman Sachs and Vulcan Value

Given the investment horizon of 90 days Goldman Sachs Future is expected to generate 1.54 times more return on investment than Vulcan Value. However, Goldman Sachs is 1.54 times more volatile than Vulcan Value Partners. It trades about 0.2 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about 0.1 per unit of risk. If you would invest  2,928  in Goldman Sachs Future on September 16, 2024 and sell it today you would earn a total of  475.00  from holding Goldman Sachs Future or generate 16.22% return on investment over 90 days.

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

Goldman Sachs Future  vs.  Vulcan Value Partners

Goldman Sachs Future

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish technical and fundamental indicators, Goldman Sachs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vulcan Value Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Value Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Vulcan Value 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 Vulcan Value

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

The idea behind Goldman Sachs Future and Vulcan Value Partners 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 Stocks Directory module to find actively traded stocks across global markets.