Correlation Between Goldman Sachs and Focus Financial

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Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Focus Financial 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 Focus Financial 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 Focus Financial Partners, you can compare the effects of market volatilities on Goldman Sachs and Focus Financial 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 Focus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Focus Financial.

Diversification Opportunities for Goldman Sachs and Focus Financial

0.83
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Goldman Sachs and Focus Financial

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.7 times more return on investment than Focus Financial. However, Goldman Sachs Group is 1.44 times less risky than Focus Financial. It trades about -0.17 of its potential returns per unit of risk. Focus Financial Partners is currently generating about -0.13 per unit of risk. If you would invest  32,051  in Goldman Sachs Group on April 7, 2022 and sell it today you would lose (2,734)  from holding Goldman Sachs Group or give up 8.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Goldman Sachs Group  vs.  Focus Financial Partners

 Performance (%) 
      Timeline 
Goldman Sachs Group 
Goldman Performance
0 of 100
Over the last 90 days Goldman Sachs Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0267
Payout Ratio
0.16
Forward Annual Dividend Rate
8.0
Dividend Date
2022-06-29
Ex Dividend Date
2022-05-31

Goldman Price Channel

Focus Financial Partners 
Focus Performance
0 of 100
Over the last 90 days Focus Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in August 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Focus Price Channel

Goldman Sachs and Focus Financial Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Goldman Sachs and Focus Financial

The main advantage of trading using opposite Goldman Sachs and Focus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Focus Financial 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 Focus Financial will offset losses from the drop in Focus Financial's long position.
The idea behind Goldman Sachs Group and Focus Financial Partners 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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