Correlation Between PRECISION DRILLING and Goldman Sachs

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

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

Diversification Opportunities for PRECISION DRILLING and Goldman Sachs

0.74

Correlation Coefficient

PRECISION DRILLING  Goldman Sachs

Poor diversification

The 3 months correlation between PRECISION and Goldman is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and PRECISION DRILLING 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 PRECISION DRILLING P 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 has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and Goldman Sachs go up and down completely randomly.

Pair Corralation between PRECISION DRILLING and Goldman Sachs

Assuming the 90 days trading horizon PRECISION DRILLING is expected to generate 12.12 times less return on investment than Goldman Sachs. In addition to that, PRECISION DRILLING is 1.53 times more volatile than The Goldman Sachs. It trades about 0.0 of its total potential returns per unit of risk. The Goldman Sachs is currently generating about 0.08 per unit of volatility. If you would invest  32,145  in The Goldman Sachs on October 24, 2024 and sell it today you would earn a total of  27,605  from holding The Goldman Sachs or generate 85.88% return on investment over 90 days.

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

PRECISION DRILLING P  vs.  The Goldman Sachs

PRECISION DRILLING

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PRECISION DRILLING P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, PRECISION DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PRECISION DRILLING and Goldman Sachs

The main advantage of trading using opposite PRECISION DRILLING and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING 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 PRECISION DRILLING P and The Goldman Sachs 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.