Correlation Between Invesco Dynamic and Goldman Sachs

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

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

Diversification Opportunities for Invesco Dynamic and Goldman Sachs

0.77

Correlation Coefficient

Invesco Dynamic  Goldman Sachs

Poor diversification

The 3 months correlation between Invesco and Goldman is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Dynamic Large and Goldman Sachs Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Future and Invesco Dynamic 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 Invesco Dynamic Large 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 Future has no effect on the direction of Invesco Dynamic i.e., Invesco Dynamic and Goldman Sachs go up and down completely randomly.

Pair Corralation between Invesco Dynamic and Goldman Sachs

Considering the 90-day investment horizon Invesco Dynamic Large is expected to under-perform the Goldman Sachs. But the etf apears to be less risky and, when comparing its historical volatility, Invesco Dynamic Large is 2.28 times less risky than Goldman Sachs. The etf trades about -0.23 of its potential returns per unit of risk. The Goldman Sachs Future is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,188  in Goldman Sachs Future on September 17, 2024 and sell it today you would earn a total of  215.00  from holding Goldman Sachs Future or generate 6.74% return on investment over 90 days.

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

Invesco Dynamic Large  vs.  Goldman Sachs Future

Invesco Dynamic Large

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Dynamic Large are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco Dynamic is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Goldman Sachs Future

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Future are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent technical and fundamental indicators, Goldman Sachs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco Dynamic and Goldman Sachs

The main advantage of trading using opposite Invesco Dynamic and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Dynamic 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 Invesco Dynamic Large and Goldman Sachs Future 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.