Correlation Between Pabrai Wagons and Goldman Sachs

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

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

Diversification Opportunities for Pabrai Wagons and Goldman Sachs

0.0

Correlation Coefficient

Pabrai Wagons  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Pabrai and Goldman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pabrai Wagons Institutional and Goldman Sachs Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Financial and Pabrai Wagons 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 Pabrai Wagons Institutional 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 Financial has no effect on the direction of Pabrai Wagons i.e., Pabrai Wagons and Goldman Sachs go up and down completely randomly.

Pair Corralation between Pabrai Wagons and Goldman Sachs

Assuming the 90 days horizon Pabrai Wagons is expected to generate 7.24 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Pabrai Wagons Institutional is 12.9 times less risky than Goldman Sachs. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Financial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  409.00  in Goldman Sachs Financial on October 11, 2024 and sell it today you would lose (309.00) from holding Goldman Sachs Financial or give up 75.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	62.1%
Values	Daily Returns

Pabrai Wagons Institutional  vs.  Goldman Sachs Financial

Pabrai Wagons Instit

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Pabrai Wagons Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pabrai Wagons is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pabrai Wagons and Goldman Sachs

The main advantage of trading using opposite Pabrai Wagons and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pabrai Wagons 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 Pabrai Wagons Institutional and Goldman Sachs Financial 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.