Correlation Between GOLDMAN SACHS and Power Financial
Can any of the company-specific risk be diversified away by investing in both GOLDMAN SACHS and Power Financial 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 Power Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLDMAN SACHS CDR and Power Financial Corp, you can compare the effects of market volatilities on GOLDMAN SACHS and Power Financial 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDMAN SACHS and Power Financial.
Diversification Opportunities for GOLDMAN SACHS and Power Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOLDMAN and Power is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GOLDMAN SACHS CDR and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial Corp 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 CDR are associated (or correlated) with Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of GOLDMAN SACHS i.e., GOLDMAN SACHS and Power Financial go up and down completely randomly.
Pair Corralation between GOLDMAN SACHS and Power Financial
Assuming the 90 days trading horizon GOLDMAN SACHS is expected to generate 29.36 times less return on investment than Power Financial. But when comparing it to its historical volatility, GOLDMAN SACHS CDR is 1.67 times less risky than Power Financial. It trades about 0.0 of its potential returns per unit of risk. Power Financial Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,620 in Power Financial Corp on September 14, 2024 and sell it today you would earn a total of 48.00 from holding Power Financial Corp or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLDMAN SACHS CDR vs. Power Financial Corp
Performance |
| Timeline |
| GOLDMAN SACHS CDR |
| Power Financial Corp |
GOLDMAN SACHS and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLDMAN SACHS and Power Financial
The main advantage of trading using opposite GOLDMAN SACHS and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDMAN SACHS position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.| GOLDMAN SACHS vs. IGM Financial | GOLDMAN SACHS vs. CNJ Capital Investments | GOLDMAN SACHS vs. CI Financial Corp | GOLDMAN SACHS vs. Economic Investment Trust |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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