Correlation Between Goldman Sachs and Royce Global

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

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

Diversification Opportunities for Goldman Sachs and Royce Global

-1.0

Correlation Coefficient

Goldman Sachs  Royce Global

Pay attention - limited upside

The 3 months correlation between Goldman and Royce is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Centrated and Royce Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Global Financial and Goldman Sachs 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 Goldman Sachs Centrated are associated (or correlated) with Royce Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Global Financial has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Royce Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Royce Global

Assuming the 90 days horizon Goldman Sachs Centrated is expected to generate 0.55 times more return on investment than Royce Global. However, Goldman Sachs Centrated is 1.82 times less risky than Royce Global. It trades about 0.02 of its potential returns per unit of risk. Royce Global Financial is currently generating about -0.03 per unit of risk. If you would invest  1,692  in Goldman Sachs Centrated on September 4, 2024 and sell it today you would earn a total of  148.00  from holding Goldman Sachs Centrated or generate 8.75% return on investment over 90 days.

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

Goldman Sachs Centrated  vs.  Royce Global Financial

Goldman Sachs Centrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Centrated 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.

Royce Global Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goldman Sachs and Royce Global

The main advantage of trading using opposite Goldman Sachs and Royce Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Royce Global 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 Royce Global will offset losses from the drop in Royce Global's long position.

The idea behind Goldman Sachs Centrated and Royce Global 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 Stocks Directory module to find actively traded stocks across global markets.