Correlation Between Goldman Sachs and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Prudential Jennison 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 Prudential Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Inflation and Prudential Jennison Emerging, you can compare the effects of market volatilities on Goldman Sachs and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Prudential Jennison.
Diversification Opportunities for Goldman Sachs and Prudential Jennison
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GOLDMAN and Prudential is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Inflation and Prudential Jennison Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison 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 Inflation are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Prudential Jennison go up and down completely randomly.
Pair Corralation between Goldman Sachs and Prudential Jennison
Assuming the 90 days horizon Goldman Sachs Inflation is expected to generate 0.31 times more return on investment than Prudential Jennison. However, Goldman Sachs Inflation is 3.27 times less risky than Prudential Jennison. It trades about -0.01 of its potential returns per unit of risk. Prudential Jennison Emerging is currently generating about -0.17 per unit of risk. If you would invest 914.00 in Goldman Sachs Inflation on August 30, 2024 and sell it today you would lose (1.00) from holding Goldman Sachs Inflation or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Inflation vs. Prudential Jennison Emerging
Performance |
| Timeline |
| Goldman Sachs Inflation |
| Prudential Jennison |
Goldman Sachs and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and Prudential Jennison
The main advantage of trading using opposite Goldman Sachs and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
| Prudential Jennison vs. Ab Bond Inflation | Prudential Jennison vs. Ab Bond Inflation | Prudential Jennison vs. Guidepath Managed Futures | Prudential Jennison vs. Goldman Sachs Inflation |
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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