Correlation Between Goldman Sachs and Essent
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Essent 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 Essent 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 Essent Group, you can compare the effects of market volatilities on Goldman Sachs and Essent 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 Essent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Essent.
Diversification Opportunities for Goldman Sachs and Essent
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goldman and Essent is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Essent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essent Group 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 Essent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essent Group has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Essent go up and down completely randomly.
Pair Corralation between Goldman Sachs and Essent
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.64 times more return on investment than Essent. However, Goldman Sachs is 1.64 times more volatile than Essent Group. It trades about 0.35 of its potential returns per unit of risk. Essent Group is currently generating about 0.4 per unit of risk. If you would invest 55,399 in Goldman Sachs Group on October 20, 2024 and sell it today you would earn a total of 7,195 from holding Goldman Sachs Group or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Essent Group
Performance |
| Timeline |
| Goldman Sachs Group |
| Essent Group |
Goldman Sachs and Essent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Essent
The main advantage of trading using opposite Goldman Sachs and Essent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Essent 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 Essent will offset losses from the drop in Essent's long position.| Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup | Goldman Sachs vs. American Express |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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