Correlation Between Goldman Sachs and Moelis

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

Diversification Opportunities for Goldman Sachs and Moelis

0.24

Correlation Coefficient

Goldman Sachs  Moelis

Modest diversification

The 3 months correlation between Goldman and Moelis is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis 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 Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Moelis go up and down completely randomly.

Pair Corralation between Goldman Sachs and Moelis

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.9 times more return on investment than Moelis. However, Goldman Sachs Group is 1.12 times less risky than Moelis. It trades about 0.05 of its potential returns per unit of risk. Moelis Co is currently generating about -0.2 per unit of risk. If you would invest  39,647  in Goldman Sachs Group on January 20, 2024 and sell it today you would earn a total of  664.00  from holding Goldman Sachs Group or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Goldman Sachs Group  vs.  Moelis Co

Goldman Sachs Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Moelis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moelis Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Goldman Sachs and Moelis

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

The idea behind Goldman Sachs Group and Moelis Co 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.