Correlation Between Invesco Energy and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Invesco Energy 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 Invesco Energy and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Energy Fund and Goldman Sachs Small, you can compare the effects of market volatilities on Invesco Energy 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 Invesco Energy with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Energy and Goldman Sachs.
Diversification Opportunities for Invesco Energy and Goldman Sachs
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Goldman is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Energy Fund and Goldman Sachs Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Small and Invesco Energy 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 Invesco Energy Fund 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 Small has no effect on the direction of Invesco Energy i.e., Invesco Energy and Goldman Sachs go up and down completely randomly.
Pair Corralation between Invesco Energy and Goldman Sachs
Assuming the 90 days horizon Invesco Energy is expected to generate 1.24 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Invesco Energy Fund is 1.11 times less risky than Goldman Sachs. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,654 in Goldman Sachs Small on September 12, 2024 and sell it today you would earn a total of 595.00 from holding Goldman Sachs Small or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Energy Fund vs. Goldman Sachs Small
Performance |
| Timeline |
| Invesco Energy |
| Goldman Sachs Small |
Invesco Energy and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Energy and Goldman Sachs
The main advantage of trading using opposite Invesco Energy and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Energy 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.| Invesco Energy vs. Vanguard Energy Fund | Invesco Energy vs. Vanguard Energy Index | Invesco Energy vs. Fidelity Select Portfolios | Invesco Energy vs. Fidelity Advisor Energy |
| Goldman Sachs vs. Hennessy Bp Energy | Goldman Sachs vs. Alpsalerian Energy Infrastructure | Goldman Sachs vs. Invesco Energy Fund | Goldman Sachs vs. Dreyfus Natural Resources |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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