Correlation Between Goldman Sachs and Lion Financial
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Lion 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 Lion Financial 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 Lion Financial Group, you can compare the effects of market volatilities on Goldman Sachs and Lion 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 Lion Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Lion Financial.
Diversification Opportunities for Goldman Sachs and Lion Financial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Goldman and Lion is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Lion Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Financial 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 Lion Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Financial Group has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Lion Financial go up and down completely randomly.
Pair Corralation between Goldman Sachs and Lion Financial
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.78 times more return on investment than Lion Financial. However, Goldman Sachs Group is 1.28 times less risky than Lion Financial. It trades about -0.17 of its potential returns per unit of risk. Lion Financial Group is currently generating about -0.16 per unit of risk. If you would invest 53,166 in Goldman Sachs Group on January 7, 2025 and sell it today you would lose (6,085) from holding Goldman Sachs Group or give up 11.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. Lion Financial Group
Performance |
| Timeline |
| Goldman Sachs Group |
| Lion Financial Group |
Goldman Sachs and Lion Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Lion Financial
The main advantage of trading using opposite Goldman Sachs and Lion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Lion 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 Lion Financial will offset losses from the drop in Lion Financial'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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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