Correlation Between Goldman Sachs and Scully Royalty

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Scully Royalty 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 Scully Royalty 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 Scully Royalty, you can compare the effects of market volatilities on Goldman Sachs and Scully Royalty 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 Scully Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Scully Royalty.

Diversification Opportunities for Goldman Sachs and Scully Royalty

-0.67

Correlation Coefficient

Goldman Sachs  Scully Royalty

Excellent diversification

The 3 months correlation between Goldman and Scully is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Scully Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scully Royalty 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 Scully Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scully Royalty has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Scully Royalty go up and down completely randomly.

Pair Corralation between Goldman Sachs and Scully Royalty

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.94 times more return on investment than Scully Royalty. However, Goldman Sachs Group is 1.07 times less risky than Scully Royalty. It trades about 0.08 of its potential returns per unit of risk. Scully Royalty is currently generating about -0.06 per unit of risk. If you would invest  50,135  in Goldman Sachs Group on September 19, 2024 and sell it today you would earn a total of  4,890  from holding Goldman Sachs Group or generate 9.75% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Scully Royalty

Goldman Sachs Group

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scully Royalty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scully Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Goldman Sachs and Scully Royalty

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

The idea behind Goldman Sachs Group and Scully Royalty 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.