Correlation Between Power Global and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Power Global and Goldman Sachs 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 Power Global and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Global Tactical and Goldman Sachs Clean, you can compare the effects of market volatilities on Power Global and Goldman Sachs 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 Power Global with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Global and Goldman Sachs.
Diversification Opportunities for Power Global and Goldman Sachs
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Power and Goldman is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Power Global Tactical and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Power Global 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 Power Global Tactical are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Clean has no effect on the direction of Power Global i.e., Power Global and Goldman Sachs go up and down completely randomly.
Pair Corralation between Power Global and Goldman Sachs
Assuming the 90 days horizon Power Global Tactical is expected to generate 0.39 times more return on investment than Goldman Sachs. However, Power Global Tactical is 2.54 times less risky than Goldman Sachs. It trades about 0.11 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.03 per unit of risk. If you would invest 924.00 in Power Global Tactical on September 2, 2024 and sell it today you would earn a total of 196.00 from holding Power Global Tactical or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Global Tactical vs. Goldman Sachs Clean
Performance |
| Timeline |
| Power Global Tactical |
| Goldman Sachs Clean |
Power Global and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Global and Goldman Sachs
The main advantage of trading using opposite Power Global and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Global position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Power Global vs. Goldman Sachs Financial | Power Global vs. Mesirow Financial Small | Power Global vs. Icon Financial Fund | Power Global vs. Vanguard Financials Index |
| Goldman Sachs vs. Pace High Yield | Goldman Sachs vs. Dunham High Yield | Goldman Sachs vs. Valic Company I | Goldman Sachs vs. American Century High |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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