Correlation Between Value Grupo and Goldman Sachs

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

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

Diversification Opportunities for Value Grupo and Goldman Sachs

-0.26

Correlation Coefficient

Value Grupo  Goldman Sachs

Very good diversification

The 3 months correlation between Value and Goldman is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Value Grupo Financiero and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Value Grupo 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 Value Grupo Financiero 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 Value Grupo i.e., Value Grupo and Goldman Sachs go up and down completely randomly.

Pair Corralation between Value Grupo and Goldman Sachs

Assuming the 90 days trading horizon Value Grupo Financiero is expected to generate 2.71 times more return on investment than Goldman Sachs. However, Value Grupo is 2.71 times more volatile than The Goldman Sachs. It trades about 0.19 of its potential returns per unit of risk. The Goldman Sachs is currently generating about -0.08 per unit of risk. If you would invest  8,300  in Value Grupo Financiero on September 16, 2024 and sell it today you would earn a total of  1,004  from holding Value Grupo Financiero or generate 12.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Value Grupo Financiero  vs.  The Goldman Sachs

Value Grupo Financiero

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Goldman Sachs

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Value Grupo and Goldman Sachs

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

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.