Correlation Between Goldman Sachs and Invesco Global

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

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

Diversification Opportunities for Goldman Sachs and Invesco Global

0.49

Correlation Coefficient

Goldman Sachs  Invesco Global

Very weak diversification

The 3 months correlation between Goldman and Invesco is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Future and Invesco Global Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Short 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 Future are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Short has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Invesco Global go up and down completely randomly.

Pair Corralation between Goldman Sachs and Invesco Global

Given the investment horizon of 90 days Goldman Sachs Future is expected to under-perform the Invesco Global. In addition to that, Goldman Sachs is 2.09 times more volatile than Invesco Global Short. It trades about -0.29 of its total potential returns per unit of risk. Invesco Global Short is currently generating about -0.09 per unit of volatility. If you would invest  1,959  in Invesco Global Short on January 28, 2024 and sell it today you would lose (15.00) from holding Invesco Global Short or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Goldman Sachs Future  vs.  Invesco Global Short

Goldman Sachs Future

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Future has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Invesco Global Short

Risk-Adjusted Performance

3 of 100

Very Weak

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

Pair Trading with Goldman Sachs and Invesco Global

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

The idea behind Goldman Sachs Future and Invesco Global Short 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.