Correlation Between Goldman Sachs and Burford Capital
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Burford Capital 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 Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and Burford Capital, you can compare the effects of market volatilities on Goldman Sachs and Burford Capital 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 Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Burford Capital.
Diversification Opportunities for Goldman Sachs and Burford Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and Burford is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital 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 Group are associated (or correlated) with Burford Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burford Capital has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Burford Capital go up and down completely randomly.
Pair Corralation between Goldman Sachs and Burford Capital
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.51 times more return on investment than Burford Capital. However, Goldman Sachs is 1.51 times more volatile than Burford Capital. It trades about 0.21 of its potential returns per unit of risk. Burford Capital is currently generating about 0.02 per unit of risk. If you would invest 52,450 in Goldman Sachs Group on August 25, 2024 and sell it today you would earn a total of 7,828 from holding Goldman Sachs Group or generate 14.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Burford Capital
Performance |
| Timeline |
| Goldman Sachs Group |
| Burford Capital |
Goldman Sachs and Burford Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Burford Capital
The main advantage of trading using opposite Goldman Sachs and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Burford Capital 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 Burford Capital will offset losses from the drop in Burford Capital's long position.| Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup | Goldman Sachs vs. American Express |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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