Correlation Between Goldman Sachs and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and SWK Holdings 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 SWK Holdings 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 SWK Holdings Corp, you can compare the effects of market volatilities on Goldman Sachs and SWK Holdings 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and SWK Holdings.
Diversification Opportunities for Goldman Sachs and SWK Holdings
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goldman and SWK is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings 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 Group are associated (or correlated) with SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and SWK Holdings go up and down completely randomly.
Pair Corralation between Goldman Sachs and SWK Holdings
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.94 times more return on investment than SWK Holdings. However, Goldman Sachs is 1.94 times more volatile than SWK Holdings Corp. It trades about 0.22 of its potential returns per unit of risk. SWK Holdings Corp is currently generating about -0.15 per unit of risk. If you would invest 52,358 in Goldman Sachs Group on August 29, 2024 and sell it today you would earn a total of 8,194 from holding Goldman Sachs Group or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. SWK Holdings Corp
Performance |
| Timeline |
| Goldman Sachs Group |
| SWK Holdings Corp |
Goldman Sachs and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and SWK Holdings
The main advantage of trading using opposite Goldman Sachs and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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