Correlation Between Goldman Sachs and Pace International
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Pace International 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 Pace International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Emerging and Pace International Emerging, you can compare the effects of market volatilities on Goldman Sachs and Pace International 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 Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Pace International.
Diversification Opportunities for Goldman Sachs and Pace International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GOLDMAN and Pace is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Emerging and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International 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 Emerging are associated (or correlated) with Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Pace International go up and down completely randomly.
Pair Corralation between Goldman Sachs and Pace International
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.01 times less return on investment than Pace International. But when comparing it to its historical volatility, Goldman Sachs Emerging is 1.02 times less risky than Pace International. It trades about 0.26 of its potential returns per unit of risk. Pace International Emerging is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,314 in Pace International Emerging on November 29, 2024 and sell it today you would earn a total of 52.00 from holding Pace International Emerging or generate 3.96% 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 Emerging vs. Pace International Emerging
Performance |
| Timeline |
| Goldman Sachs Emerging |
| Pace International |
Goldman Sachs and Pace International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Pace International
The main advantage of trading using opposite Goldman Sachs and Pace International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Pace International 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 Pace International will offset losses from the drop in Pace International's long position.| Goldman Sachs vs. Blackrock Financial Institutions | Goldman Sachs vs. Prudential Financial Services | Goldman Sachs vs. Vanguard Financials Index | Goldman Sachs vs. Financial Industries Fund |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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