Correlation Between Goldman Sachs and Kennedy Capital

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

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

Diversification Opportunities for Goldman Sachs and Kennedy Capital

0.87

Correlation Coefficient

Goldman Sachs  Kennedy Capital

Very poor diversification

The 3 months correlation between Goldman and Kennedy is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Strategic and Kennedy Capital Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Esg 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 Strategic are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Esg has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Kennedy Capital go up and down completely randomly.

Pair Corralation between Goldman Sachs and Kennedy Capital

Assuming the 90 days horizon Goldman Sachs Strategic is expected to generate 1.28 times more return on investment than Kennedy Capital. However, Goldman Sachs is 1.28 times more volatile than Kennedy Capital Esg. It trades about 0.06 of its potential returns per unit of risk. Kennedy Capital Esg is currently generating about -0.01 per unit of risk. If you would invest  1,311  in Goldman Sachs Strategic on September 21, 2024 and sell it today you would earn a total of  61.00  from holding Goldman Sachs Strategic or generate 4.65% return on investment over 90 days.

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

Goldman Sachs Strategic  vs.  Kennedy Capital Esg

Goldman Sachs Strategic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Strategic are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kennedy Capital Esg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Capital Esg has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Kennedy Capital 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 Kennedy Capital

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

The idea behind Goldman Sachs Strategic and Kennedy Capital Esg 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.