Correlation Between Power Floating and Goldman Sachs

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

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

Diversification Opportunities for Power Floating and Goldman Sachs

0.61

Correlation Coefficient

Power Floating  Goldman Sachs

Poor diversification

The 3 months correlation between Power and Goldman is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Power Floating Rate and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute and Power Floating 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 Power Floating Rate 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 Absolute has no effect on the direction of Power Floating i.e., Power Floating and Goldman Sachs go up and down completely randomly.

Pair Corralation between Power Floating and Goldman Sachs

Assuming the 90 days horizon Power Floating Rate is expected to generate 0.18 times more return on investment than Goldman Sachs. However, Power Floating Rate is 5.56 times less risky than Goldman Sachs. It trades about 0.47 of its potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.07 per unit of risk. If you would invest  987.00  in Power Floating Rate on September 19, 2024 and sell it today you would earn a total of  18.00  from holding Power Floating Rate or generate 1.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Power Floating Rate  vs.  Goldman Sachs Absolute

Power Floating Rate

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Power Floating Rate are ranked lower than 37 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Power Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Absolute

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Absolute are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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 Power Floating and Goldman Sachs

The main advantage of trading using opposite Power Floating and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Floating 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 Power Floating Rate and Goldman Sachs Absolute 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.