Correlation Between Goldman Sachs and Invesco Energy
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Invesco Energy 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 Invesco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Short and Invesco Energy, you can compare the effects of market volatilities on Goldman Sachs and Invesco Energy 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 Invesco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Invesco Energy.
Diversification Opportunities for Goldman Sachs and Invesco Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GOLDMAN and Invesco is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Short and Invesco Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Energy 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 Short are associated (or correlated) with Invesco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Energy has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Invesco Energy go up and down completely randomly.
Pair Corralation between Goldman Sachs and Invesco Energy
Assuming the 90 days horizon Goldman Sachs is expected to generate 1.21 times less return on investment than Invesco Energy. But when comparing it to its historical volatility, Goldman Sachs Short is 8.94 times less risky than Invesco Energy. It trades about 0.19 of its potential returns per unit of risk. Invesco Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,203 in Invesco Energy on September 3, 2024 and sell it today you would earn a total of 105.00 from holding Invesco Energy or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Short vs. Invesco Energy
Performance |
| Timeline |
| Goldman Sachs Short |
| Invesco Energy |
Goldman Sachs and Invesco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Invesco Energy
The main advantage of trading using opposite Goldman Sachs and Invesco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Invesco Energy 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 Invesco Energy will offset losses from the drop in Invesco Energy's long position.| Goldman Sachs vs. SPACE | Goldman Sachs vs. Bayview Acquisition Corp | Goldman Sachs vs. Ampleforth | Goldman Sachs vs. ionet |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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