Correlation Between Goldman Sachs and Xp

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

Diversification Opportunities for Goldman Sachs and Xp

-0.77

Correlation Coefficient

Goldman Sachs  Xp

Pay attention - limited upside

The 3 months correlation between Goldman and Xp is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Xp go up and down completely randomly.

Pair Corralation between Goldman Sachs and Xp

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.81 times more return on investment than Xp. However, Goldman Sachs Group is 1.23 times less risky than Xp. It trades about 0.16 of its potential returns per unit of risk. Xp Inc is currently generating about -0.15 per unit of risk. If you would invest  49,064  in Goldman Sachs Group on September 4, 2024 and sell it today you would earn a total of  11,107  from holding Goldman Sachs Group or generate 22.64% 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.  Xp Inc

Goldman Sachs Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Goldman Sachs and Xp

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

The idea behind Goldman Sachs Group and Xp Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.