Correlation Between Goldman Sachs and BMO Long

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and BMO Long 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 BMO Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs ActiveBeta and BMO Long Federal, you can compare the effects of market volatilities on Goldman Sachs and BMO Long 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 BMO Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and BMO Long.

Diversification Opportunities for Goldman Sachs and BMO Long

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Goldman and BMO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ActiveBeta and BMO Long Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Long Federal 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 ActiveBeta are associated (or correlated) with BMO Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Long Federal has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and BMO Long go up and down completely randomly.

Pair Corralation between Goldman Sachs and BMO Long

Given the investment horizon of 90 days Goldman Sachs ActiveBeta is expected to generate 0.6 times more return on investment than BMO Long. However, Goldman Sachs ActiveBeta is 1.67 times less risky than BMO Long. It trades about 0.11 of its potential returns per unit of risk. BMO Long Federal is currently generating about 0.01 per unit of risk. If you would invest  3,864  in Goldman Sachs ActiveBeta on November 27, 2024 and sell it today you would earn a total of  1,324  from holding Goldman Sachs ActiveBeta or generate 34.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.79%
ValuesDaily Returns

Goldman Sachs ActiveBeta  vs.  BMO Long Federal

 Performance 
       Timeline  
Goldman Sachs ActiveBeta 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs ActiveBeta are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
BMO Long Federal 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BMO Long Federal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, BMO Long is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Goldman Sachs and BMO Long Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Goldman Sachs and BMO Long

The main advantage of trading using opposite Goldman Sachs and BMO Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, BMO Long 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 BMO Long will offset losses from the drop in BMO Long's long position.
The idea behind Goldman Sachs ActiveBeta and BMO Long Federal 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing