Correlation Between Goldman Sachs and ATT

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

Diversification Opportunities for Goldman Sachs and ATT

0.26

Correlation Coefficient

Goldman Sachs  ATT

Modest diversification

The 3 months correlation between Goldman and ATT is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and ATT go up and down completely randomly.

Pair Corralation between Goldman Sachs and ATT

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.95 times more return on investment than ATT. However, Goldman Sachs Group is 1.05 times less risky than ATT. It trades about 0.06 of its potential returns per unit of risk. ATT Inc is currently generating about -0.01 per unit of risk. If you would invest  28,422  in Goldman Sachs Group on January 19, 2024 and sell it today you would earn a total of  12,176  from holding Goldman Sachs Group or generate 42.84% 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 Group  vs.  ATT Inc

Goldman Sachs Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in May 2024.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Goldman Sachs and ATT

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

The idea behind Goldman Sachs Group and ATT Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.