Correlation Between Power Global and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Power Global 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 Power Global and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Global Tactical and Goldman Sachs Real, you can compare the effects of market volatilities on Power Global 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 Power Global with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Global and Goldman Sachs.
Diversification Opportunities for Power Global and Goldman Sachs
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Power and Goldman is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Power Global Tactical and Goldman Sachs Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Real and Power Global 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 Power Global Tactical 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 Real has no effect on the direction of Power Global i.e., Power Global and Goldman Sachs go up and down completely randomly.
Pair Corralation between Power Global and Goldman Sachs
Assuming the 90 days horizon Power Global is expected to generate 1.18 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Power Global Tactical is 2.23 times less risky than Goldman Sachs. It trades about 0.09 of its potential returns per unit of risk. Goldman Sachs Real is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,089 in Goldman Sachs Real on September 4, 2024 and sell it today you would earn a total of 279.00 from holding Goldman Sachs Real or generate 25.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Power Global Tactical vs. Goldman Sachs Real
Performance |
| Timeline |
| Power Global Tactical |
| Goldman Sachs Real |
Power Global and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Global and Goldman Sachs
The main advantage of trading using opposite Power Global and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Global 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.| Power Global vs. Power Floating Rate | Power Global vs. Power Floating Rate | Power Global vs. Prudential Jennison International | Power Global vs. Fidelity New Markets |
| Goldman Sachs vs. Realty Income | Goldman Sachs vs. Dynex Capital | Goldman Sachs vs. First Industrial Realty | Goldman Sachs vs. Healthcare Realty Trust |
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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