Correlation Between Goldman Sachs and Invesco Summit

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Invesco Summit 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 Invesco Summit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldman Sachs Centrated and Invesco Summit Fund, you can compare the effects of market volatilities on Goldman Sachs and Invesco Summit 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 Invesco Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Invesco Summit.

Diversification Opportunities for Goldman Sachs and Invesco Summit

0.77

Correlation Coefficient

Goldman Sachs  Invesco Summit

Poor diversification

The 3 months correlation between Goldman and Invesco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Centrated and Invesco Summit Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Summit 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 Centrated are associated (or correlated) with Invesco Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Summit has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Invesco Summit go up and down completely randomly.

Pair Corralation between Goldman Sachs and Invesco Summit

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.38 times less return on investment than Invesco Summit. But when comparing it to its historical volatility, Goldman Sachs Centrated is 1.49 times less risky than Invesco Summit. It trades about 0.05 of its potential returns per unit of risk. Invesco Summit Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,456  in Invesco Summit Fund on February 5, 2024 and sell it today you would earn a total of  73.00  from holding Invesco Summit Fund or generate 2.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Goldman Sachs Centrated  vs.  Invesco Summit Fund

Goldman Sachs Centrated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Centrated are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco Summit

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Summit Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Summit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Invesco Summit

The main advantage of trading using opposite Goldman Sachs and Invesco Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Invesco Summit 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 Invesco Summit will offset losses from the drop in Invesco Summit's long position.

The idea behind Goldman Sachs Centrated and Invesco Summit Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.