Correlation Between Takeda Pharmaceutical and Goldman Sachs

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

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

Diversification Opportunities for Takeda Pharmaceutical and Goldman Sachs

-0.65

Correlation Coefficient

Takeda Pharmaceutical  Goldman Sachs

Excellent diversification

The 3 months correlation between Takeda and Goldman is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Takeda Pharmaceutical 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 Takeda Pharmaceutical 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 Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Goldman Sachs go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Goldman Sachs

Assuming the 90 days trading horizon Takeda Pharmaceutical is expected to under-perform the Goldman Sachs. But the stock apears to be less risky and, when comparing its historical volatility, Takeda Pharmaceutical is 2.19 times less risky than Goldman Sachs. The stock trades about -0.04 of its potential returns per unit of risk. The The Goldman Sachs is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  44,293  in The Goldman Sachs on September 4, 2024 and sell it today you would earn a total of  12,907  from holding The Goldman Sachs or generate 29.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Takeda Pharmaceutical  vs.  The Goldman Sachs

Takeda Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Takeda Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Takeda Pharmaceutical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Goldman Sachs

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Takeda Pharmaceutical and Goldman Sachs

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

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.