Correlation Between Goldman Sachs and Rocket Companies

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

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

Diversification Opportunities for Goldman Sachs and Rocket Companies

-0.83

Correlation Coefficient

Goldman Sachs  Rocket Companies

Pay attention - limited upside

The 3 months correlation between Goldman and Rocket is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies 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 Group are associated (or correlated) with Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Rocket Companies go up and down completely randomly.

Pair Corralation between Goldman Sachs and Rocket Companies

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 1.27 times more return on investment than Rocket Companies. However, Goldman Sachs is 1.27 times more volatile than Rocket Companies. It trades about 0.23 of its potential returns per unit of risk. Rocket Companies is currently generating about -0.32 per unit of risk. If you would invest  52,358  in Goldman Sachs Group on August 27, 2024 and sell it today you would earn a total of  7,920  from holding Goldman Sachs Group or generate 15.13% return on investment over 90 days.

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

Goldman Sachs Group  vs.  Rocket Companies

Goldman Sachs Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rocket Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocket Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Goldman Sachs and Rocket Companies

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

The idea behind Goldman Sachs Group and Rocket Companies 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..