Correlation Between Prime Dividend and GOLDMAN SACHS
Can any of the company-specific risk be diversified away by investing in both Prime Dividend 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 Prime Dividend and GOLDMAN SACHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Dividend Corp and GOLDMAN SACHS CDR, you can compare the effects of market volatilities on Prime Dividend 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 Prime Dividend with a short position of GOLDMAN SACHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Dividend and GOLDMAN SACHS.
Diversification Opportunities for Prime Dividend and GOLDMAN SACHS
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prime and GOLDMAN is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Prime Dividend Corp and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS CDR and Prime Dividend 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 Prime Dividend Corp 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 CDR has no effect on the direction of Prime Dividend i.e., Prime Dividend and GOLDMAN SACHS go up and down completely randomly.
Pair Corralation between Prime Dividend and GOLDMAN SACHS
Assuming the 90 days trading horizon Prime Dividend is expected to generate 1.79 times less return on investment than GOLDMAN SACHS. In addition to that, Prime Dividend is 1.82 times more volatile than GOLDMAN SACHS CDR. It trades about 0.02 of its total potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about 0.08 per unit of volatility. If you would invest 1,676 in GOLDMAN SACHS CDR on September 12, 2024 and sell it today you would earn a total of 1,238 from holding GOLDMAN SACHS CDR or generate 73.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Dividend Corp vs. GOLDMAN SACHS CDR
Performance |
| Timeline |
| Prime Dividend Corp |
| GOLDMAN SACHS CDR |
Prime Dividend and GOLDMAN SACHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Dividend and GOLDMAN SACHS
The main advantage of trading using opposite Prime Dividend and GOLDMAN SACHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Dividend 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's long position.| Prime Dividend vs. Brompton Lifeco Split | Prime Dividend vs. North American Financial | Prime Dividend vs. Financial 15 Split |
| GOLDMAN SACHS vs. Brompton Lifeco Split | GOLDMAN SACHS vs. North American Financial | GOLDMAN SACHS vs. Prime Dividend Corp | GOLDMAN SACHS vs. Financial 15 Split |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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