Correlation Between Goldman Sachs and Acquirers

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

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

Diversification Opportunities for Goldman Sachs and Acquirers

0.94

Correlation Coefficient

Goldman Sachs  Acquirers

Almost no diversification

The 3 months correlation between Goldman and Acquirers is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs MarketBeta and The Acquirers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acquirers 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 MarketBeta are associated (or correlated) with Acquirers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acquirers has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Acquirers go up and down completely randomly.

Pair Corralation between Goldman Sachs and Acquirers

Given the investment horizon of 90 days Goldman Sachs is expected to generate 1.63 times less return on investment than Acquirers. But when comparing it to its historical volatility, Goldman Sachs MarketBeta is 1.59 times less risky than Acquirers. It trades about 0.14 of its potential returns per unit of risk. The Acquirers is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,877  in The Acquirers on August 30, 2024 and sell it today you would earn a total of  438.00  from holding The Acquirers or generate 11.3% return on investment over 90 days.

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

Goldman Sachs MarketBeta  vs.  The Acquirers

Goldman Sachs MarketBeta

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs MarketBeta are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Acquirers

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Acquirers are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Acquirers may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Goldman Sachs and Acquirers

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

The idea behind Goldman Sachs MarketBeta and The Acquirers 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.