Correlation Between Shopify and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Shopify 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 Shopify and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Goldman Sachs Dynamic, you can compare the effects of market volatilities on Shopify 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 Shopify with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Goldman Sachs.
Diversification Opportunities for Shopify and Goldman Sachs
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shopify and Goldman is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Goldman Sachs Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Dynamic and Shopify 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 Shopify 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 Dynamic has no effect on the direction of Shopify i.e., Shopify and Goldman Sachs go up and down completely randomly.
Pair Corralation between Shopify and Goldman Sachs
Given the investment horizon of 90 days Shopify is expected to under-perform the Goldman Sachs. In addition to that, Shopify is 2.17 times more volatile than Goldman Sachs Dynamic. It trades about -0.2 of its total potential returns per unit of risk. Goldman Sachs Dynamic is currently generating about -0.14 per unit of volatility. If you would invest 2,011 in Goldman Sachs Dynamic on January 25, 2024 and sell it today you would lose (56.00) from holding Goldman Sachs Dynamic or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify vs. Goldman Sachs Dynamic
Performance |
| Timeline |
| Shopify |
| Goldman Sachs Dynamic |
Shopify and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and Goldman Sachs
The main advantage of trading using opposite Shopify and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify 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' long position.The idea behind Shopify and Goldman Sachs Dynamic 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 Stocks Directory module to find actively traded stocks across global markets.
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