Correlation Between Goldman Sachs and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Tesco PLC 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 Tesco PLC 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 Tesco PLC, you can compare the effects of market volatilities on Goldman Sachs and Tesco PLC 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 Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Tesco PLC.
Diversification Opportunities for Goldman Sachs and Tesco PLC
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goldman and Tesco is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco PLC 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 Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Tesco PLC go up and down completely randomly.
Pair Corralation between Goldman Sachs and Tesco PLC
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 2.73 times more return on investment than Tesco PLC. However, Goldman Sachs is 2.73 times more volatile than Tesco PLC. It trades about 0.23 of its potential returns per unit of risk. Tesco PLC is currently generating about -0.15 per unit of risk. If you would invest 52,358 in Goldman Sachs Group on August 27, 2024 and sell it today you would earn a total of 7,920 from holding Goldman Sachs Group or generate 15.13% 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. Tesco PLC
Performance |
| Timeline |
| Goldman Sachs Group |
| Tesco PLC |
Goldman Sachs and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Tesco PLC
The main advantage of trading using opposite Goldman Sachs and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Tesco PLC 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 Tesco PLC will offset losses from the drop in Tesco PLC's long position.| Goldman Sachs vs. Morgan Stanley | Goldman Sachs vs. JPMorgan Chase Co | Goldman Sachs vs. Wells Fargo | Goldman Sachs vs. Citigroup |
| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Dairy Farm International | Tesco PLC vs. Woolworths Group Limited | Tesco PLC vs. Kesko Oyj ADR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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