Correlation Between Invesco SP and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Invesco SP 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 SP 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 SP 500 and Goldman Sachs MarketBeta, you can compare the effects of market volatilities on Invesco SP 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 SP with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Goldman Sachs.

Diversification Opportunities for Invesco SP and Goldman Sachs

0.66

Correlation Coefficient

Invesco SP  Goldman Sachs

Poor diversification

The 3 months correlation between Invesco and Goldman is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta and Invesco SP 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 SP 500 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 MarketBeta has no effect on the direction of Invesco SP i.e., Invesco SP and Goldman Sachs go up and down completely randomly.

Pair Corralation between Invesco SP and Goldman Sachs

Considering the 90-day investment horizon Invesco SP is expected to generate 1.89 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Invesco SP 500 is 1.01 times less risky than Goldman Sachs. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,476  in Goldman Sachs MarketBeta on October 27, 2024 and sell it today you would earn a total of  1,811  from holding Goldman Sachs MarketBeta or generate 52.1% return on investment over 90 days.

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

Invesco SP 500  vs.  Goldman Sachs MarketBeta

Invesco SP 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco SP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Goldman Sachs MarketBeta

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs MarketBeta are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco SP and Goldman Sachs

The main advantage of trading using opposite Invesco SP and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP 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 SP 500 and Goldman Sachs MarketBeta 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.