Correlation Between Scully Royalty and Goldman Sachs

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

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

Diversification Opportunities for Scully Royalty and Goldman Sachs

-0.67

Correlation Coefficient

Scully Royalty  Goldman Sachs

Excellent diversification

The 3 months correlation between Scully and Goldman is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Scully Royalty 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 Scully Royalty 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 Scully Royalty 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 Scully Royalty i.e., Scully Royalty and Goldman Sachs go up and down completely randomly.

Pair Corralation between Scully Royalty and Goldman Sachs

Considering the 90-day investment horizon Scully Royalty is expected to generate 3.24 times less return on investment than Goldman Sachs. In addition to that, Scully Royalty is 2.25 times more volatile than Goldman Sachs Group. It trades about 0.01 of its total potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.08 per unit of volatility. If you would invest  32,496  in Goldman Sachs Group on September 20, 2024 and sell it today you would earn a total of  23,470  from holding Goldman Sachs Group or generate 72.22% return on investment over 90 days.

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

Scully Royalty  vs.  Goldman Sachs Group

Scully Royalty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scully Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Goldman Sachs Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scully Royalty and Goldman Sachs

The main advantage of trading using opposite Scully Royalty and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scully Royalty 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 Scully Royalty 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.