Correlation Between Goldman Sachs and Great-west

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

By analyzing existing cross correlation between Goldman Sachs Short and Great West T Rowe, you can compare the effects of market volatilities on Goldman Sachs and Great-west 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 Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Great-west.

Diversification Opportunities for Goldman Sachs and Great-west

-0.4

Correlation Coefficient

Goldman Sachs  Great-west

Very good diversification

The 3 months correlation between GOLDMAN and Great-west is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Great West T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West T 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 Short are associated (or correlated) with Great-west. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West T has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Great-west go up and down completely randomly.

Pair Corralation between Goldman Sachs and Great-west

Assuming the 90 days horizon Goldman Sachs is expected to generate 847.0 times less return on investment than Great-west. But when comparing it to its historical volatility, Goldman Sachs Short is 5.54 times less risky than Great-west. It trades about 0.0 of its potential returns per unit of risk. Great West T Rowe is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,234  in Great West T Rowe on September 4, 2024 and sell it today you would earn a total of  176.00  from holding Great West T Rowe or generate 5.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Goldman Sachs Short  vs.  Great West T Rowe

Goldman Sachs Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Great West T

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West T Rowe are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west 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 Great-west

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

The idea behind Goldman Sachs Short and Great West T Rowe 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.