Correlation Between Raymond James and Goldman Sachs

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

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

Diversification Opportunities for Raymond James and Goldman Sachs

0.95

Correlation Coefficient

Raymond James  Goldman Sachs

Almost no diversification

The 3 months correlation between Raymond and Goldman is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and Raymond James 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 Raymond James Financial 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 Group has no effect on the direction of Raymond James i.e., Raymond James and Goldman Sachs go up and down completely randomly.

Pair Corralation between Raymond James and Goldman Sachs

Considering the 90-day investment horizon Raymond James Financial is expected to generate 0.9 times more return on investment than Goldman Sachs. However, Raymond James Financial is 1.11 times less risky than Goldman Sachs. It trades about 0.3 of its potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.17 per unit of risk. If you would invest  11,884  in Raymond James Financial on September 3, 2024 and sell it today you would earn a total of  5,044  from holding Raymond James Financial or generate 42.44% return on investment over 90 days.

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

Raymond James Financial  vs.  Goldman Sachs Group

Raymond James Financial

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking indicators, Raymond James reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 13 (%) 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.

Pair Trading with Raymond James and Goldman Sachs

The main advantage of trading using opposite Raymond James and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raymond James 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 Raymond James Financial and Goldman Sachs Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.