Correlation Between Goldman Sachs and Mr Cooper

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

By analyzing existing cross correlation between Goldman Sachs Group and Mr Cooper Group, you can compare the effects of market volatilities on Goldman Sachs and Mr Cooper 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 Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Mr Cooper.

Diversification Opportunities for Goldman Sachs and Mr Cooper

0.79

Correlation Coefficient

Goldman Sachs  Mr Cooper

Poor diversification

The 3 months correlation between Goldman and COOP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Mr Cooper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Cooper Group 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 Group are associated (or correlated) with Mr Cooper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Cooper Group has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Mr Cooper go up and down completely randomly.

Pair Corralation between Goldman Sachs and Mr Cooper

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.02 times more return on investment than Mr Cooper. However, Goldman Sachs is 1.02 times more volatile than Mr Cooper Group. It trades about -0.09 of its potential returns per unit of risk. Mr Cooper Group is currently generating about -0.23 per unit of risk. If you would invest  60,006  in Goldman Sachs Group on September 26, 2024 and sell it today you would lose (1,727) from holding Goldman Sachs Group or give up 2.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Goldman Sachs Group  vs.  Mr Cooper Group

Goldman Sachs Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mr Cooper Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Mr Cooper is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Goldman Sachs and Mr Cooper

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

The idea behind Goldman Sachs Group and Mr Cooper Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .