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 The Goldman Sachs 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

-0.75

Correlation Coefficient

Goldman Sachs  Xp

Pay attention - limited upside

The 3 months correlation between Goldman and Xp is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs 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 The Goldman Sachs 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

Assuming the 90 days trading horizon The Goldman Sachs is expected to generate 1.14 times more return on investment than Xp. However, Goldman Sachs is 1.14 times more volatile than Xp Inc. It trades about 0.18 of its potential returns per unit of risk. Xp Inc is currently generating about -0.17 per unit of risk. If you would invest  9,058  in The Goldman Sachs on September 24, 2024 and sell it today you would earn a total of  2,578  from holding The Goldman Sachs or generate 28.46% return on investment over 90 days.

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

The Goldman Sachs  vs.  Xp Inc

Goldman Sachs

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Goldman Sachs sustained 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. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 The Goldman Sachs 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..