Correlation Between Evercore Partners and Goldman Sachs

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

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

Diversification Opportunities for Evercore Partners and Goldman Sachs

0.56

Correlation Coefficient

Evercore Partners  Goldman Sachs

Very weak diversification

The 3 months correlation between Evercore and Goldman is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Evercore Partners and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Evercore Partners 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 Evercore Partners 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 Evercore Partners i.e., Evercore Partners and Goldman Sachs go up and down completely randomly.

Pair Corralation between Evercore Partners and Goldman Sachs

Considering the 90-day investment horizon Evercore Partners is expected to generate 3.54 times more return on investment than Goldman Sachs. However, Evercore Partners is 3.54 times more volatile than The Goldman Sachs. It trades about 0.17 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.12 per unit of risk. If you would invest  23,753  in Evercore Partners on August 31, 2024 and sell it today you would earn a total of  7,057  from holding Evercore Partners or generate 29.71% return on investment over 90 days.

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

Evercore Partners  vs.  The Goldman Sachs

Evercore Partners

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evercore Partners are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Evercore Partners reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Evercore Partners and Goldman Sachs

The main advantage of trading using opposite Evercore Partners and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evercore Partners 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 Evercore Partners 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.