Correlation Between VersaBank and GOLDMAN SACHS

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

By analyzing existing cross correlation between VersaBank and GOLDMAN SACHS CDR, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of GOLDMAN SACHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and GOLDMAN SACHS.

Diversification Opportunities for VersaBank and GOLDMAN SACHS

0.84

Correlation Coefficient

VersaBank  GOLDMAN SACHS

Very poor diversification

The 3 months correlation between VersaBank and GOLDMAN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS CDR and VersaBank 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 VersaBank 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 CDR has no effect on the direction of VersaBank i.e., VersaBank and GOLDMAN SACHS go up and down completely randomly.

Pair Corralation between VersaBank and GOLDMAN SACHS

Assuming the 90 days trading horizon VersaBank is expected to under-perform the GOLDMAN SACHS. In addition to that, VersaBank is 2.65 times more volatile than GOLDMAN SACHS CDR. It trades about -0.32 of its total potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about -0.16 per unit of volatility. If you would invest  3,001  in GOLDMAN SACHS CDR on October 1, 2024 and sell it today you would lose (133.00) from holding GOLDMAN SACHS CDR or give up 4.43% of portfolio value over 90 days.

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

VersaBank  vs.  GOLDMAN SACHS CDR

VersaBank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VersaBank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VersaBank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GOLDMAN SACHS CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDMAN SACHS CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, GOLDMAN SACHS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VersaBank and GOLDMAN SACHS

The main advantage of trading using opposite VersaBank and GOLDMAN SACHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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's long position.

The idea behind VersaBank and GOLDMAN SACHS CDR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.