Correlation Between Goldman Sachs and Cohen
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Cohen 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 Cohen 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 Cohen Company, you can compare the effects of market volatilities on Goldman Sachs and Cohen 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 Cohen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Cohen.
Diversification Opportunities for Goldman Sachs and Cohen
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldman and Cohen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Cohen Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Company 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 Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Company has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Cohen go up and down completely randomly.
Pair Corralation between Goldman Sachs and Cohen
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.25 times more return on investment than Cohen. However, Goldman Sachs is 1.25 times more volatile than Cohen Company. It trades about -0.04 of its potential returns per unit of risk. Cohen Company is currently generating about -0.11 per unit of risk. If you would invest 55,724 in Goldman Sachs Group on December 11, 2024 and sell it today you would lose (2,558) from holding Goldman Sachs Group or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Cohen Company
Performance |
| Timeline |
| Goldman Sachs Group |
| Cohen Company |
Goldman Sachs and Cohen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Cohen
The main advantage of trading using opposite Goldman Sachs and Cohen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Cohen 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 Cohen will offset losses from the drop in Cohen's long position.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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