Correlation Between Goldman Sachs and Invesco Optimum

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

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

Diversification Opportunities for Goldman Sachs and Invesco Optimum

0.28

Correlation Coefficient

Goldman Sachs  Invesco Optimum

Modest diversification

The 3 months correlation between Goldman and Invesco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs ETF and Invesco Optimum Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Optimum Yield 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 ETF are associated (or correlated) with Invesco Optimum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Optimum Yield has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Invesco Optimum go up and down completely randomly.

Pair Corralation between Goldman Sachs and Invesco Optimum

Considering the 90-day investment horizon Goldman Sachs ETF is expected to under-perform the Invesco Optimum. In addition to that, Goldman Sachs is 1.23 times more volatile than Invesco Optimum Yield. It trades about 0.0 of its total potential returns per unit of risk. Invesco Optimum Yield is currently generating about 0.05 per unit of volatility. If you would invest  1,343  in Invesco Optimum Yield on March 7, 2024 and sell it today you would earn a total of  27.00  from holding Invesco Optimum Yield or generate 2.01% return on investment over 90 days.

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

Goldman Sachs ETF  vs.  Invesco Optimum Yield

Goldman Sachs ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco Optimum Yield

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Optimum Yield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Invesco Optimum is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Goldman Sachs and Invesco Optimum

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

The idea behind Goldman Sachs ETF and Invesco Optimum Yield 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.