Correlation Between Goldman Sachs and Marfrig Global

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

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

Diversification Opportunities for Goldman Sachs and Marfrig Global

-0.06

Correlation Coefficient

Goldman Sachs  Marfrig Global

Good diversification

The 3 months correlation between Goldman and Marfrig is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Capital and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Capital are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Marfrig Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Marfrig Global

Considering the 90-day investment horizon Goldman Sachs Capital is expected to generate 0.23 times more return on investment than Marfrig Global. However, Goldman Sachs Capital is 4.29 times less risky than Marfrig Global. It trades about 0.03 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about -0.23 per unit of risk. If you would invest  2,646  in Goldman Sachs Capital on October 8, 2024 and sell it today you would earn a total of  12.00  from holding Goldman Sachs Capital or generate 0.45% return on investment over 90 days.

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

Goldman Sachs Capital  vs.  Marfrig Global Foods

Goldman Sachs Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Marfrig Global Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Marfrig Global

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

The idea behind Goldman Sachs Capital and Marfrig Global Foods 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 Anywhere module to track or share privately all of your investments from the convenience of any device.