Correlation Between INVEX Controladora and Goldman Sachs

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

By analyzing existing cross correlation between INVEX Controladora SAB and The Goldman Sachs, you can compare the effects of market volatilities on INVEX Controladora and Goldman Sachs 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 INVEX Controladora with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of INVEX Controladora and Goldman Sachs.

Diversification Opportunities for INVEX Controladora and Goldman Sachs

-0.12

Correlation Coefficient

INVEX Controladora  Goldman Sachs

Good diversification

The 3 months correlation between INVEX and Goldman is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding INVEX Controladora SAB and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and INVEX Controladora 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 INVEX Controladora SAB are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of INVEX Controladora i.e., INVEX Controladora and Goldman Sachs go up and down completely randomly.

Pair Corralation between INVEX Controladora and Goldman Sachs

Assuming the 90 days trading horizon INVEX Controladora is expected to generate 15.77 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, INVEX Controladora SAB is 3.98 times less risky than Goldman Sachs. It trades about 0.04 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  966,218  in The Goldman Sachs on September 29, 2024 and sell it today you would earn a total of  203,892  from holding The Goldman Sachs or generate 21.1% return on investment over 90 days.

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

INVEX Controladora SAB  vs.  The Goldman Sachs

INVEX Controladora SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INVEX Controladora SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, INVEX Controladora is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INVEX Controladora and Goldman Sachs

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

The idea behind INVEX Controladora SAB and The Goldman Sachs 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.